Cash v. Credit

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You just finished shopping at your favorite store and have a basket full of items that you are excited to take home. At the cash register the clerk asks you the infamous question, “Will this be cash, or credit?” Fumbling your fingers through your wallet, you decide to use your credit card. 

Both cash and credit have their share of pros and cons. Earning credit card rewards is great, but if you accumulate too much debt over time you will be penalized with interest charges. Don’t jump to conclusions and assume that carrying cash is the obvious choice. Sometimes just getting your hands on it can be tough due to banking hours. 

Cash Pros

Cash is excepted just about everywhere and is easy to budget. The simple reason on why it works is that once you are out of cash, you are not able to spend any more. It’s convenient to carry it in certain instances. For instance, if you are plan on traveling, or just keeping some aside for emergency purposes. 

Cash Cons

It’s risky to carry a lot of cash, because if it’s stolen it can’t be traced. Finding an ATM can be tricky and you are unable to withdraw more than $500 at a time. If you need more, you have to take a trip to your bank’s nearest branch, which isn’t always that convenient. 

Credit Card Pros

Credit cards are accepted just about everywhere and they give you wiggle room to spend a little more than you actually have. Many offer 0% APR periods for as long as 21 months, which gives you a nice cushion of time to pay off the loan. 

Credit cards win over cash if they are lost or stolen simply because you can track them. Every card user is protected against fraudulent credit card transactions.

Rewards and perks are another benefit of credit cards. For instance, you could earn free upgrades with a travel card. Other bonus categories offer a percentage back on gas and food. 

Credit Card Cons

The downside to credit cards is tacking on debt to people who lack the ability to pay it off. If you make a purchase on credit, you want to be able to pay the card off in full by the time your next billing cycle comes around. Missing payments will hurt your credit score and raise your interest rate.

Both cash and credit have their place. If you are a person who has a hard time budgeting and are dealing with credit debt, then the practicality of sticking with cash is beneficial. On the flip side, if you have a handle on spending within your means, you could be better off using a credit card.

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