7 Times to Avoid Debit or Credit Cards

By Mikey Rox. Last updated 15 October 2015. 3 comments

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Paying with debit or credit cards is fast, convenient, and easy. Despite the arguments for debit and credit cards, however — some of which are totally valid — there are instances when cash is the better option. What are they? Check out six of them here, and share some of your own suggestions in the comments below.

1. When the Impulse-Buying Pangs Hit

One of the worst times for using your debit or credit card is when making small, insignificant purchases like food items, or basically anything from a convenient or quick-stop shop, like a CVS, Walgreens, or Rite-Aid. Those places have all the makings of impulse-buy overload, and you generally don't need whatever it is you're purchasing. The problem is those small expenses add up quickly — and they're hard to keep track of. Do it too often and you're in for a big surprise when the bill comes and, as a result, in danger of negatively affecting your budget.

Kelsa Dickey, a Tempe, Arizona-based financial counselor, specializes in teaching budgeting, debt-reduction strategies, cash flow planning, and more, and she wholly advocates against this practice.

"If you use a credit card for day-to-day spending, it's very easy to not pay attention to how much is going on there and accidentally overspend," she says. "I would avoid using credit cards in those situations. If you ever get your bill at the end of the month and you kind of gasp when you see the total, I'm looking at you!"

2. When Making Major Purchases, Like a Car

It can be tempting to make a major purchase, like a car, with your credit card, especially if you have a card that offers perks, like reward points. The downside to this logic, however, is that the massive sum of a major purchase also comes with equally sizable interest and late fees. If you don't have the funds to pay off the balance immediately, putting this purchase on a credit card is not a good idea. Instead, opt for a traditional loan (with a reasonable interest rate) or pay in cash if you have it to avoid additional fees, altogether.

3. When Dealing With Cash-Equivalent Transactions

I've seen it time and again at the casino: When a player runs out of money, they hand their credit card to the dealer or visit the cashier for a cash advance from their credit card so they can continue making donations to the establishment. And that's bad news for multiple reasons. First, if you've resorted to this financial low, you've obviously run out of spendable cash. Second, these transactions aren't cheap. Third, you have a gambling problem — but that's neither here nor there in this post.

Robert Harrow, analyst for personal-finance research site ValuePenguin and a regular contributor to the Huffington Post's Financial Education section, explains further.

"No one should be using a credit card to pay for lottery tickets, gambling chips, cashiers checks, or anything that might be flagged as a 'cash equivalent transaction,'" he says. "Banks categorize these purchases as cash advances, which means higher than normal interest rates, and extra fees come attached."

4. When You Have the Opportunity to Haggle

When visiting yard sales, flea markets, farmers' markets, and other mom-and-pop-type setups, using cash can work to your advantage. For starters, many of the vendors at these places don't have the ability to accept credit or debit cards — though that's increasingly changing with the availability of mobile-swiping devices. Yet that convenience still doesn't provide them with cash-in-hand, which makes your pocket full of Washingtons and Lincolns much more attractive. And because they get the money immediately, these folks are much more apt to make a deal on the spot, lest you walk away. Personally, I think it's the best part about these events — so long as both parties are walking away satisfied (in other words, don't try to rip anybody off).

5. When You're Trying to Help the "Little Guys"

It you like shopping local or otherwise want to help the little guys — i.e. the service industry or anybody who works for tips — your best bet is to do it with cash. In some instances when paying for services on your credit or debit card, the individual service provider may not receive that money right away, as some places pay out tips weekly.

Additionally, some financial establishments charge the general service providers about 3% of the total transaction haul, which is sometimes passed on to the individual — which, by the way, hardly seems fair; if you do this to your employees, you should be ashamed of yourself. In any case, to avoid these scenarios, cash is best. Using cash also helps put money in the individual's pocket right then and there, which, if they're living paycheck to paycheck, can be helpful for life's necessary expenses, like gas, food, and other items.

6. When You Know You Can't Afford it Right Now

A lot of people believe that credit cards, especially, are for the sole purpose of making purchases that you can't otherwise afford, like when you have little to no discretionary funds. That's a flawed logic. In emergencies, that's true, but there are times when we convince ourselves that we need something (that we totally don't) and reach for the credit card to pay for it. Read this carefully: If you can't afford something that you can absolutely live without, you don't need it. If you don't have the cash to back it up, put it out of your mind until you get back on track.

7. When You're Unsure About the Safety of Your Personal Information

There are plenty of financial experts who will tell you that you should never use a debit or credit card online, at restaurants, in convenience stores, and other places because you're at risk of having your financial information compromised… but I'm not one of them.

While their stance on the issue is not inaccurate — security breaches happen all the time — I find it rather infeasible to live in today's world without using plastic at least some of the time. Those risks are ones that I'm willing to take, so long as I'm vigilant about using only secure sites, never giving my credit card number over the phone (this is a very important tip to remember), and banking at an institution that will back me up if my information is compromised. Thus, this suggestion is a relative one: If you don't feel comfortable using your credit or debit card someplace, trust your instincts; you're probably not wrong. In these cases, use cash.

Don't, however, get that cash from the ATM in an establishment you're already weary about; that doesn't protect you any better from potential fraudulent activity. Personally, I try to only make a withdrawal at my or another reputable bank's ATMs opposed to random machines.

When do you avoid whipping out the plastic?

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Guest's picture

I avoid cc shopping when I crave chocolate because I figure I'm not buying it for valid reasons and I'll regret the purchase later.
Since putting a serious dent in my cc balances, I also have been waiting a week before putting something on them to make sure I really want/need whatever it is.

Guest's picture
Guest :)

#6 "Read this carefully: If you can't afford something that you can absolutely live without, you do need it."

I read this carefully and I think it was written incorrectly. Should read: If you can't afford something and you can absolutely live without, you DON'T need it.

Lynn Truong's picture

Thank you for catching that!