If you have both cash and a credit card (or more) on-hand, how exactly do you decide which to pay with?
"Cashor credit?" You probably get asked this question at least once everyday, at grocery stores, retailers, restaurants—pretty much anywhere you spendmoney that accepts both forms of payment. If you have both cash and a credit card (or more) on-hand, howexactly do you decide which to pay with?
Manypeople believe that the only reason that you should pay for anything with yourcredit card is if you can afford it right that second. That way, you can enjoythe points and other benefits that come with using your credit card withoutworrying about adding more and more interest to your balance over time by onlypaying the minimum payments each month. Instead, you are able to pay off theentire balance immediately and skip all that pesky interest that canaccumulate.
There aremany advantages and disadvantages to both cash and credit. Let's talk about theadvantages to paying with cash:
- It provides anonymity.
- Paying with cash can help to prevent overspending. If you only have fifty dollars in your wallet, and that splurge purchase that you weren't planning on purchasing costs sixty dollars, you'll have to say goodbye to that particular impulse buy. On the other hand, if you go with credit, you can plop that credit card down, no matter how out of your budget the product happens to be.
- Sometimes, paying with credit comes with a more expensive price tag. For example, if you pay your taxes with a credit card, you will incur an extra fee ranging from 1.90% to 3.93%, which could be quite costly depending upon how much you owe. In cases such as this one, paying with cash is your best bet.
- When you pay with cash, you won't have to worry about paying interest on your purchase, as was mentioned earlier.
Now let'stalk about the advantages of paying with credit cards:
- It's convenient. You don't have to be in-person to purchase something with a credit card. With the increased popularity of online shopping, credit cards are being used for purchases more and more.
- It's secure. If you lose your credit card, you can call your credit card company, cancel your card, and reorder a new one. However, if you lose cash…well, it's gone, period, and you'll never see that money again.
- Credit cards can track orders easily. If you order something, pay with a credit card, and never receive your order, you can get your money back. However, if you order something, pay with cash, and never receive your order, you're out of luck—unless the company or individual issues a refund.
Those arejust a few pros and cons when it comes to paying with cash versus paying withcredit. As you can see, it depends greatly on the circumstances. The best thingyou can do is fully understand the pros and cons or cash versus credit andapply your knowledge to each situation as it arises.
KatrinaRobinson is a freelance writerand editor based in Charleston, South Carolina. She writes abouta wide variety of topics including health, fashion, finance, and credit cards.