The Debate Wages on: is Cash or Credit Card Better?

When making any kind of purchase, the same question is always asked (even if not out loud): will you pay in cash or using a credit card? It is typical for many people to use one or the other in different situations because both payment methods do have their own advantages and disadvantages. The key is to balance your choices so that you get the best of both.

If you read a lot of personal finance, you will hear the experts loudly proclaiming cash is better or credit card is better! They have their reasons, and ultimately it depends on you and your personality. Your Billings accountant lays out the details why you might choose one over the other.

Advantages of Paying in Cash

Controlled Spending – When you pay with cash, you are forced to be more mindful of your spending because you can only spend money that you actually have. If you go shopping with $500 in your pocket, you can’t let your purchases go over $500.00. If you bring your credit card instead of cash, although you plan to spend only $500.00, it will take more willpower to stick to that budget and avoid impulse buying to because it is just so much easier to have your credit card swiped than hand over real cash.

No additional costs – With cash payments, there are no fees to worry about. With credit cards, even if you do not have to pay for any interest because you make sure to always pay your full balance on its due date, you’ll still have to contend with other fees such as annual fees, foreign transaction fees, cash advance fees, and balance transfer fees. And, if you happen to pay your bill past its due date (even just once), you will not only get charged with interest and late fees, it will negatively affect your credit history and credit score as well.

Security – When you pay with your credit card, merchants get the chance to ask for personal information (such as your email address, contact number, or your residence address) which they can then use for their promotional and marketing campaigns. By giving out this information, you are opening yourself up to the possibility of being victimized through data security breaches and identity theft. And even though you might not be held liable for unauthorized purchases done as a result of such, sorting things out might take some time and you will have to suffer through some unnecessary inconvenience. When you pay with cash, however, you rarely have to give out your personal data, and, you’ll be that much harder to track (for whatever reason you don’t want to be tracked by anybody).

Advantages of Using Credit Cards

Safety – Carrying too much money is rarely a smart move. When you lose your wallet or your money gets stolen, it’s simply gone for good. When you lose your credit card, you can just have it canceled and replaced. And, you will not have to pay for unauthorized purchases because of the protection that comes with it.

Convenience – When you carry only enough cash and an unexpected purchase needs to be done, you’ll have to resort to making an unscheduled withdrawal from your bank. If you have a credit card, you can easily pay for your purchase with it, and then make sure you include it in next month’s budget so you won’t have to pay for any interest charge.

Flexibility – When you’re fond of traveling, having a credit card gives you more flexibility because foreign stores and vendors generally accept payments from major credit cards. In contrast, you might need to have your cash converted to the country’s currency before you will be able to use it to pay for anything.

Additional perks – Paying in cash keeps you away from additional fees and charges, but rarely ever gives you the chance to receive any other perks. Credit card companies, on the other hand, usually offer rewards and incentive programs such as frequent flier miles, freebies from partner establishments, cash back rewards, and all kinds of discounts. More importantly, every time you pay your credit card bill on time, it makes your credit history look better and consequently, improves your credit score. This will certainly come in handy when you get faced with the need for a huge amount cash which you can only come up with by applying for a loan.

Easy monitoring – Credit card statements give you a complete and accurate record of all the purchases you made. With cash, you will have to do manual recording of your purchases so you’ll know where your money went.

Do You Prefer Cash or Credit Card?

The debate will always wage. Some will say cash is better, others claim you’re throwing away money by not utilizing perks. What it boils down to is your preference. If you’re disciplined and can manage your spending, then a credit card is great. But if you tend to overspend, then carrying cash is ideal.

Regardless of your method of spending, Practical Taxes, your best choice for accountant in Billings, MT, will provide you with outstanding service, prepare your taxes for less than you think, and get you the biggest tax refund possible.