6 Times When You Don’t Want to Use a Credit Card

Nearly everyone seems to have a credit card in their wallet, and these days nearly anything can be purchased with one. Nevertheless, there are some times when it makes sense not use a credit card, despite its security and convenience.

Here are six of the best times when you don’t want to use a credit card:

1. Bargaining

Credit cards are great for the buyer, but they have some disadvantages for the seller. Notably, merchants are typically charged a credit card fee of 2-4%.

In order to have a bit more leverage when bargaining, buyers can make it clear that they intend to pay in cash. This might give the seller an incentive to lower their price even more, especially since many merchants tend to overestimate the amount they pay in credit card transaction fees.

2. Making small purchases from small businesses

The thing about credit card merchant fees is that it often consists of both a flat fee and a percentage of the transactions. The total cost of the merchant fees can be well into double digits when you make a small purchase.

For small businesses, these fees can be crippling. Sometimes the owners of these businesses will request cash instead of credit cards, but usually customers can quietly show their support by offering cash, especially for their smallest transactions.

The next time you are at a flea market or a farmer’s market, know that vendors usually appreciate your use of cash over credit cards.

3. When there is a credit card surcharge

Credit card surcharges are now legal in states, although there are still nine states that have laws forbidding them, including California, Texas and Florida.

When presented with a credit card surcharge, it is usually better to use cash, even if your credit card offers you rewards. In most cases, the points, miles, or cash back offered will be worth less than the 3-4% surcharge imposed on your purchase.

4. Paying taxes

The IRS has authorized several companies to collect taxes with a credit card, but it isn’t the smartest thing to do.

These companies are allowed to impose a surcharge of between 1.86% and 2.35%, and this amount is likely to be more than any credit card rewards are worth.

5. When carrying a balance

One of the worst times to use a credit card might be when you are unable to pay your balance in full at the end of the month. This means that your purchases will begin incurring costly interest charges on the day of the transaction.

6. When you need cash

Worse than carrying a balance is requesting a cash advance. These transactions are subject to cash advance fees and a higher interest rate, while they always start incurring interest immediately.

Using a debit card or obtaining cash just about any other way is preferable to facing all of these charges.