Don't use your credit card to do this!

Find out about four things you should never do with your flexible friend.

Used sensibly, credit cards can help you get your money situation back on track. Some act as interest-free loans, others will earn you cashback, and several could even help you dig yourself out of debt.

However - used incorrectly, that ‘fantastic plastic’ could also spell financial disaster. Here are four things you should never do with your flexible friend!

1. Withdrawing cash

There is no excuse for using your credit card to withdraw cash in anything other than an absolute emergency. Here are four very good reasons why:

• Credit card cash withdrawals are charged at a whopping rate of interest - typically around 25% APR or even more.

• Most credit card transactions grant you an ‘interest free’ period of around 55 days. However, you’ll start being charged that huge interest rate on cash withdrawals as soon as the money leaves the machine.

• You’ll usually be charged a cash withdrawal fee of 2% to 3% of the total amount, with a minimum charge of £2 to £3.

• In most cases, negative order of payment will mean your cash withdrawal (and all that interest) will be the very last debt to be cleared on your credit card.

In a nutshell, don’t do it!

2. Using the right credit card for the wrong thing

Most credit cards shouldn’t be used for more than one purpose. Handled incorrectly, even ‘market leading’ credit cards can get you into a financial pickle.

For example, this Barclaycard Platinum card is one of the best balance transfer cards on the market, offering 0% interest on balance transfers for 15 months.

However, it shouldn’t be used for new spending. The 0% new purchase rate only lasts for three months. And (because of that dastardly negative order of payment) this is the debt that will be cleared from the card last.

The best way to dodge this problem is to use the Barclaycard Platinum card for 0% balance transfers, and another card for spending.

Alternatively, hunt down a card that operates positive order of payment (where the most expensive debts are cleared first) or one that offers 0% balance transfer and 0% purchase periods lasting exactly the same length of time.

The best card in this category is this brand new card from Sainsbury’s. It offers 0% for 12 months on balance transfers and new purchases. So after you’ve transferred a debt on this card, you can still spend on it interest-free for a year, without having to worry about being penalised for your spending later.

Similarly, you shouldn’t use a cashback card if you can’t clear your balance - in full - every month. Even the best cashback cards won’t pay you enough to make up for all the interest you end up paying on that unpaid debt. As always, it’s horses for courses.

Read Don’t make this costly credit card mistake to find out more.

3. Making mortgage payments

According to housing charity Shelter, over one million householders have used credit cards to pay their mortgage or rent in the last year.

Borrowing money on a credit card to meet basic housing costs is unsustainable, and is likely to lead to disaster. You need to stop getting further into debt, so stop using that plastic and seek help immediately.

The first step is to get free debt advice from a charity like National Debtline. They should be able to explain exactly what your options are, and set you on the path to financial recovery.

4. Making minimum monthly repayments

In recent years, the minimum monthly repayments (MMRs) on credit cards have dropped sharply. Nowadays, MMRs on many credit cards are as low as 2% to 2.5%.

Related goal

Pay off credit card debts

How to destroy your credit card debt quickly and effectively.

Do this goal

In order to keep your monthly outgoings low, you may want to keep your repayments to the absolute minimum. However, this is a big financial mistake in the long term. Only making the MMR every month could mean your credit card debt takes several years to pay off.

And even worse, you could end up losing thousands of extra pounds in interest payments.

Read Make this credit card mistake and lose £11,834 to find out more. And to keep those interest payments to a minimum, try to overpay whenever possible, and clear that debt as soon as you can.

Good luck!

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Get help from lovemoney.com

If you need help with credit card debt, you've come to the right place.

First, adopt this goal: Pay off credit card debts

Then, watch this video: Slash your credit card debt in four easy steps

Finally, why not have a wander over to Q&A and ask other lovemoney.com members for hints and tips about what worked best for them?

More: Three very good credit cards for borrowers | 13 very long interest-free credit cards