Q: Why when purchasing something on iTunes, is it not deducted from my Apple balance and is instead charged to my credit card?

There's a simple way to stop this from happening. First you want to get rid of your credit card information off your iTunes account so when you purchase something from iTunes then it won't be able to put it on your credit card. First you would want to open up iTunes and click on iTunes Store on the left hand margin. Then you want to click on your Apple account username or email which is located on the top right hand corner. A pop-up screen should pop up asking for your password to enter through your information. Put your password in and click on "View Account". Your information would then pop-up. Click on "edit" on the same line where it says "payment type". Press "none" on payment type". Let me know if you have any other questions or problems with this

Certain items such as gift cards cannot be purchased with gift balance on an account.

I am having the same problem and selecting none does not work.  Any other suggestions.

Why can’t I select None when I edit my payment information? - http://support.apple.com/kb/TS5366

More detail on removing credit card information - https://discussions.apple.com/message/22084215#22084215

How to remove credit card details? - https://discussions.apple.com/thread/4062900

How do I remove my credit card... - https://discussions.apple.com/thread/4197488