"When not to use your card" first appeared on iafrica.com on 28 May 2010. It is the third most read "Financial fitness" article of the past year. Liked it? Get your finances in shape in 2011 - bookmark http://personalfinance.iafrica.com/.

(Click here to read '10 tips to stay debt free', then follow those ten tips to a tee and you are guaranteed to become and stay debt free forever!)

The term "rob Peter to pay Paul" is typically related to credit card debt and here are some things you should never use your credit card for...

A credit card is good for emergencies and it can get you out of a lot of trouble when you need to pay something you do not have the immediate cash for. However, many of us do not know which purchases are okay to make on our credit cards.

When not to use your credit card

Here are some tips on what not to use your credit card for:

 

  1. Do not use your credit card to cover your shortfall in monthly debt commitments or living expenses; you will never repay the debt.

     

  2. Do not have multiple credit cards; it increases your debt exposure.

     

  3. Do not use your credit card for purchases you have not budgeted for; add up to 26 percent interest to every purchase (i.e. for every R100 purchase you are charged R26 interest).

     

  4. Do not use your credit card to purchase gifts or "splurge" items; use retail accounts that have six months interest free plans.

     

  5. Do not increase your credit facility automatically, unless your income has increased to cover the repayment.

     

  6. Do not use your credit card as a current account. Certain banks have current account packages which cover swiping and electronic transactions; these are not applicable to credit cards.

     

  7. Do not use your credit card for monthly transactions unless you're able to settle the balance within 55 days. Certain banks have a 55 day interest free period if the balance is settled in full within 55 days.

     

  8. Do not use your credit card to consolidate debt. Certain financial institutions have debt consolidation loans at lower interest rates.

     

  9. Do not use your credit card to finance study loans for students. Certain financial institutions offer study loans at discounted rates.

     

  10. Do not use your credit card to finance items you could have saved for; sometimes "Cash is King".

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