There has always been a huge debate about which option is better to pay with: cash vs. credit card? Some people prefer to only pay with credit card, while others stick to paying with cash only. There are many reasons that people believe one is superior to the other.
Be sure to keep reading to learn about the pros and cons of paying with a credit card vs paying with cash.
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Pros of Using Cash
Some people are skeptical about paying with credit and prefer to pay only with cash. Here are some reasons why cash might be a better option to pay with:
Widely Accepted
Cash is accepted basically everywhere, except online, so you will generally be able to buy almost anything if you have enough cash. On the other hand, some places don’t accept credit card, or only accept certain kinds of credit cards.
Tangibility
We can all agree that it is not pleasant to see money leaving your bank account. When you buy something with cash, however, it does not directly affect the number in your bank account. Some people prefer to purchase things with cash in order to see how quickly they are spending their money.
No Interest or Fees
Paying with cash means you don’t have to pay for any interest or fees — you only have to pay the cost of the item. Because of this, people prefer to pay with cash because it is simpler and less expensive in the long run.
Freedom From Debt
You are much more to fall into debt if you frequently pay with a credit card. With cash, on the other hand, it is much harder since you are spending money you physically have and aren’t borrowing from someone. However, you must still be cautious when you are spending with cash because you can still overspend.
Safety
If you accidentally misplace your credit card, you might get your information stolen. However, with cash, there’s no way to trace your personal information, and therefore it is much safer.
Cons of Using Cash
No Theft Protection
Although a benefit of using cash is that you won’t get your personal information stolen, this is also a drawback because if you lose cash, it will be much harder to get it back.
Hard to Track
Paying with cash can be difficult if you are trying to keep track of your expenses. On the other hand, with a credit card, you get a monthly statement that tells you exactly how much and where you spent your money.
Some Purchases Require a Credit Card
You can’t use cash when you’re shopping online, so paying with a credit card is usually your only option. However, you can also use a gift card, debit card, or some form of online payment.
Pros of Credit Cards
There are many advantages and disadvantages to paying with a credit card. Here are some of the pros:
Large Purchases
Using a credit card allows you to allocate the costs when you make large purchases. This is also convenient because you won’t have to wait weeks or months to save up for something that is rather expensive.
Expense Tracking
As mentioned previously, using cash makes it hard to track all your expenses. However, paying with credit card is beneficial because you are able to see each month exactly how much and where you spent your money. Additionally, you will be able to see if there are any suspicious charges.
Credit Score
Having a good credit score is crucial in today’s society. For instance, if you want to get a student loan or buy a house, you will need good credit. As a result, you must use credit in order to build credit.
Rewards
Many credit card companies offer great rewards for spending a certain amount of money. Although this might lead you to overspend, if used responsibly, you can receive some great rewards. For instance, some credit cards offer 1 to 5 percent cash back when you purchase gas.
Safety
Although this can be seen as a benefit for cash, it is also an advantage for credit cards too, depending how you look at it. If you lose cash, it is most likely gone forever, however if you lose a credit card, you can just cancel or freeze it, and you’re money won’t be completely gone.
Cons of Using Credit Cards
You Tend to Spend More
Paying with a credit card might make you more likely to spend more because you don’t physically see your cash decreasing. Additionally, you technically won’t have to pay for that purchase until a month later, so it is easier to spend more.
You Must Apply for Credit
If you don’t already have a credit card, you need to apply for one. This might be difficult if you have bad credit, so if that’s the case, then I recommend you check out a secured credit card, which can help you improve your credit score.
Fees and High Interest Rates
With cash, there are no fees or high interest rates that you would have to pay with a credit card. However, if you aren’t responsible and don’t pay your bill on time each month, you will rack up some high fees and interest rates. As a result, this will negate any rewards you’ve earned.
Author’s Verdict
Hopefully after reading this post, you’re informed about the advantages and disadvantages of paying with cash vs. credit card. However, even if you prefer paying with cash, you will most likely need to use a credit card at some point. Just make sure you are using it responsibly and paying your bill on time.
In addition, we have a list of bank promotions to get some extra cash in your pockets today. You may also want to check out savings accounts if you want to get started on saving up money.
