Credit Karma Answers: Are There Certain Things I Shouldn’t Purchase on My Credit Card?


The Question:

I came across this article online and wanted your thoughts on it; is it true that we should avoid certain purchases on our credit card?

The Answer:

The short answer: Probably. But maybe not for the reason you think.

Credit card companies typically flag out-of-character purchases for fear that someone has stolen and used your card, not necessarily because they’re judging you to punish risky financial behavior.

When you make a purchase, the only thing that shows up on your credit card statement is the company name, not the actual purchase. Although credit card companies can see your transactions, it’s not likely that they’ll determine you are a greater financial risk if you put a liquor store charge on your credit card.

However, it is more likely that you’ll pose a risk if you use your credit card for cash advances. A cash advance shows that you’re willing to leverage your credit and pay back the advance at an extremely high interest rate, which could be a definite red flag on a credit card company’s radar.

It is far less likely that other “naughty” purchases like traffic tickets, adult items, lottery tickets, and alcohol would be a red flag.  Although credit card companies can see where you are purchasing from, it’s uncertain and unfounded that they’ll take action against you due to this risky behavior. This is mainly speculation.

Impact on Your Credit Score

Here’s more good news: The purchases you make cannot and will not directly affect your credit score. Your credit card company can see your spending behavior because they’re handling your credit directly. But credit bureaus, credit card issuers, and lenders cannot see those purchases, so rest-assured that it can’t influence a creditor’s decision to approve you for a card or loan or to set your interest rate.

The factors that can and will affect your credit have more to do with how you use your credit, not what you use your credit to purchase. For example, to maintain a healthy, low-risk credit profile, be sure to never have missed or late payments, never use more than 30% of your available credit, and never apply for tons of credit at once.

Better Safe Than Sorry

Above all, if you’re uncertain of a company’s credibility, don’t do business with them, especially online. If you’re worried that your credit card company may be monitoring your purchases, take extra precautions. Here are three methods to help you avoid using credit in some cases.

Use cash. At small shops or restaurants that you’re unsure of, take some cash along to pay for your transaction.

Use a Paypal account. When it comes to online purchases—particularly from websites you’re unfamiliar with—don’t pull out your plastic. Instead, create a PayPal account and use that. It keeps your bank account and credit card information safe.

Get a Visa Gift Card. This is another good online trick because your purchase won’t be viewed and you won’t risk giving your credit card number to suspicious sites.

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