1. Putting on small purchases

Using your credit card to pay for small indulgences might not seem like a big deal, but those cups of coffee on your card eventually add up. Indulging your taste buds might be enticing at the moment but it can have a negative drawback on your card, especially if you are spending during the holidays. 32% of Aussies are most likely to make a purchase they do not need at a supermarket. You should be more careful if you are solely swiping for rewards or cash back benefits. This could easily swing out of your control only to get little in return. If you use your card to swipe for every small purchase it could wreak havoc on your balance. The higher your balance is the harder it will become to pay off.

2. Not timing your purchases

Thinking of buying a home appliance that could take a big bite into your budget and card? The best way to go about it is to wait. Timing large expenses such as cars and holiday expenses can save you lots of money in the long run. If you are looking to buy a flat screen TV for the price of $3,000 but choose to wait until there is a sale you could save hundreds of dollars in the process. Getting the timing right is all about knowing when the item you desire will most likely be sold for less because of a sale or they are trying to bring on new stock. This is also an opportune time to brush off your negotiating skill to get something that is more in your price range.

3. Making big purchases that can be sorted out with a loan

There are just some things that are better paid off with a loan than your credit card for large purchases. If you are looking to hang ten at your favourite holiday destination, or you want to invest in a new car then getting a loan will be worth your money. Loans for such big purchases work out better due to the added features it has and the low interest rate that comes with it. Credit cards on the other hand can come with stringent repayments and higher interest rates that won’t be beneficial to you. It can also push your monthly balance higher, which can make it hard to meet monthly repayments.

4. Cash advances

Credit cards come with many features. Some might offer cash advances where you are able to make a withdrawal or borrow a short-term loan against your credit card account. This might be appealing, but once you check out the finer details of this feature you could be in for a shock. The withdrawal might be subject to high fees and interest rates. The APR on a cash advance is generally higher than an APR on a purchase. Australians currently pay $32.2 billion in interest. It would be advisable to avoid cash advances, unless it is an emergency. The alternative is to look for a card that has a low interest rate on cash advances.

5. Medical bills

Medical emergencies can pop up when you least expect them. However, using your credit card to pay off medical bills can affect your credit card in the worst way possible. One thing to keep in mind is that for every purchase you put on your card there is an interest rate that will soon follow. Medical care is expensive. Therefore, if you need to pay off the bill immediately but have no other way, you will be better off speaking to the hospital or doctor financial office to organise some form of payment plan or taking up a medical expenses personal loan.