Is It Better To Use Cash Or A Credit Card?

by Pam on October 10, 2009

is it better to use cash or credit card to make purchases?Cash or Credit Card?  The decision is really up to you.  I’ve outlined just a few of the pros and cons of using cash versus a credit card to shop.  I personally prefer to use a credit card, but I wouldn’t recommend using a credit card unless you know you can pay off the balance every month.

Pros to Using Cash:

*Both methods are not subject to per-transaction fees, however some companies reward customers for using cash by giving them a discount or benefit as it costs the company less to process a cash transaction than a credit card transaction.

*If the networks are down or if the power has gone out, stores can still process cash transactions.

*Carrying cash is also handy for those rare stores/restaurants that don’t accept credit or debit transactions.

*Some people become more conscious about how much they are spending when they use cash.  If using cash makes you more frugal, then that’s definitely something to take into account.

Cons to Using Cash:

*Money is quite dirty.  It’s been touched by a multitude of hands.  You want to make sure you wash your hands after handling money.

*Money can get really heavy if you end up with a lot of change.

*Cash transactions generally take more time to process than credit card transactions.

*With the exception of a few stores that give benefits to those using cash, there generally isn’t any incentive to make cash transactions (i.e. no rewards points).

Pros to Using Credit Cards:

*Transactions are usually processed quickly and credit cards are accepted almost everywhere.

*You don’t have to pay for your transactions until the due date, so it can buy you some time to get the funds if you don’t already have the funds available.

*You can earn benefits/rewards for using your credit card.

*Many credit cards also have insurances and other discounts and benefits attached to them that you could take advantage of,

Cons to Using Credit Cards:

* You pay a significant amount of interest if you don’t pay off your balance each month.  Most credit cards charge 19% interest or higher.

* It creates an extra bill for you to pay each month.

* For some people, using a credit card causes them to spend more money than if they use cash to make purchases.

It’s really up to you whether you choose to use cash or credit to make purchases.  You know your spending habits better than anyone else, so you need to decide for yourself what works for you.  Neither one is really any better than the other, but if one method helps you to be more disciplined when it comes to spending and saving money, then by all means, use that method.

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