Six things you should NEVER buy on a credit card – and three you should

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CREDIT cards can be a handy way to spend, but used wrongly and they can end up costing you cash.

Paying for the wrong things using your card could end up really hurting your finances – as well as your credit score.

There are some things you should never put on a credit card

Prices of household essentials, food, fuel, travel and energy bills are all on skyrocketing at the moment.

It means millions could be in the red or unable to cover bills – and might look to take out credit to get by.

While this may be tempting, there are some things you should never put on your credit card – and somethings you should.

It’s important to note that it’s not a good idea to take out a card to simply get by.

You could end up worse off if you can’t pay it back and it could affect your ability to take out loans in the future.

We spoke to the experts at credit agency Experian and put together a list of the main things you should always avoid paying for on a credit card, and those you should.

Six things you should never put on a credit card

1. Everyday non-essentials

You should not be paying for everyday items like takeaways, clothes and nights out on your credit card – unless you can pay it off.

James Jones, head of consumer affairs at Experian said: “Using credit to pay for everyday essentials is usually unwise unless you are able to clear the balance at the end of the month.”

That’s because unless you pay off the full amount at the end of each month you’ll be charged interest.

This means you could end up racking up debt you can’t pay back.

Instead it’s best to spend within your means and you could do this in a variety of ways, the easiest being budgeting.

By looking at your monthly income and factoring in how much you’ll need to spend on essentials like food, rent, insurance and bills, you can look at how much will be left and give yourself a spending amount for each week.

Apps like Money Dashboard and Monzo can tell you where you can afford to put money aside each month and gives you a better ideal of what you can spend.

One Sun reader recently shared how she managed to put aside £2,600 in just over a year with the help of a money-saving app Plum.

2. Household bills

Using your card to pay for monthly or annual payments like energy or water bills is not a good idea.

James says it’s “not sustainable” and it is likely to lead to financial problems down the line.

That’s because these bills are going to keep popping up month after month and if you keep borrowing to pay them off, you’re just adding more debt.

It can be a dangerous habit to get into and could negatively impact your credit report.

Instead, if you’re really struggling to pay your household bills there may be help available to you.

For example, energy suppliers and the government are providing help through a variety of different means at the moment as costs soar.

Millions of households have been receiving a £400 energy bill discount since last year and there’s a final £67 payment coming this month.

Meanwhile, the government is pumping a further £842million into the Household Support Fund after March 31 which councils are giving out to help towards costs.

These grants are dished out by your energy supplier and there are a few different ones available.

For example, British Gas is offering £1,500 in support to customers in need through the British Gas Energy Trust.

Water companies are increasing their support for low-income households by up to £200million, according to Water UK.

3. Mortgages and other credit repayments

“It’s also not recommended to use your credit card to pay for essentials such as your mortgage or rent payments and loans”, James said.

This is is because you may be running the risk of getting into more debt.

It also includes paying off other credit cards, car finance or Buy Now, Pay Later payments.

James said: “Using credit to pay other credit comments is rarely wise and often a sign of financial stress.”

High interest or late fees can lead to more debt being added, making it much tougher to pay back.

It means that credit agencies who look at your credit score could be put off giving you a further loan as it makes you look financially unstable.

Instead, you should focus on spending within your means and budgeting for expenses like this.

If you’re worried about repaying large loans like your mortgage it’s always best to speak to your lender first.

It’s best to do this before you know you won’t be able to meet your monthly repayments, and not after.

After you’ve talked to your lender, look at how you can minimise your monthly outgoings.

We spoke to a mortgage expert on the things you should do if you’re struggling to pay your mortgage.

4. Tax for self-employed

If you’re self-employed, you should avoid paying your self-assessment tax bill on a corporate credit card too.

That’s because there’s a built in fee on corporate credit or debit payments.

The fee is non-refundable so you won’t get it back.

There isn’t a fee for paying on a personal debit card of course so it’s best to use this instead.

James said: “For using a credit card as opposed to a debit card, such as tax payments for self-employed – always use the cheapest way to pay if you can, to help you keep more money in your pocket.”

5. ATM withdrawals

While suitable for one-off emergencies, cash withdrawals on a credit card are likely to bring a charge, making it a costly way to get cash.

Any cash withdrawals like this will be flagged on your credit report.

This could mean you’re viewed as “high risk” by lenders.

James said: “Cash withdrawals on credit are not recommended as you’ll usually get charged around 3% of the amount you take out.

“And if you do this often, it could make lenders cautious when you apply for credit as they will be able to see that you’ve taken out cash with your credit card on your credit report and may see this as a sign of financial stress.”

Instead make sure to take out any cash from ATM’s using your debit card and make sure you have enough in the bank to do so.

Make sure to be aware of overdraft charges if you do go over what you have.

6. Buying foreign currency

Similar to making ATM withdrawals, buying currency with a credit card may trigger charges.

So when you’re taking out cash for a holiday or trip, it’s always best to use another payment method that avoids these charges.

This could be using a debit card or swapping out cash.

Things you should put on a credit card

1. Purchases over £100

“Used responsibly and carefully, your credit card can be used to make a range of purchases from clothes to bigger things such as holidays and technology which could provide you with a few benefits,” James said.

For example, customers are protected under Section 75 of the Consumer Rights Act if you pay for items that cost more than £100 and less than £30,000 using your credit card.

That’s even if you’ve just paid a small deposit on your card.

This is because Section 75 was put in place to help consumers if something goes wrong.

James added: “So, your credit card company is just as responsible as the retailer or travel company to help you out on occasions where your item arrives faulty, or the airline goes bust.”

2. Regular spending

If you have a rewards or cashback card and use it frequently for purchases like food shopping or larger spends such as holidays you could get something in return.

For instance, some schemes offer money off your next shop or a discount on your next holiday.

“However, before making these purchases make sure you’ll be able to repay your spending, so you’re not storing up trouble for the future,” James warned.

These loyalty rewards can really add up and if you avoid paying any interest charges it’s can be really handy James said.

3. Overseas purchases

James said that certain cards, that no charge fees for foreign currency transactions, can be a great way to get good exchange rates.

These are usually travel-friendly credit cards like Halifax Clarity and the Barclaycard Rewards Visa.

It means that when you’re abroad you have access to good deals on exchange rates.

If you’re struggling to pay off credit card debt

Before making any applications for a credit card it’s important to first check your eligibility.

You can do this on comparison sites including Experian, where soft searches are recorded that won’t affect your credit score.

If you find yourself in a position in which you’re unlikely to be approved, then you can take steps to improve your credit score or review other options.

Here are six easy ways you can boost your credit score.

If you’re finding yourself with unmanageable debts or being unable to pay all your monthly bills it’s important you speak to the relevant creditors or service providers as soon as possible to see if they can help.

James said: “You may also find that debt charities such as StepChange and National Debtline can offer valuable guidance or support on appropriate options to get back in control.”

Do you have a money problem that needs sorting? Get in touch by emailing [email protected]