The debate has been going on for some time with no clear answer yet: Which is better, cash or credit cards? There are valid arguments presented by both sides, though the answer may really be subjective. Here’s a look at why some people prefer to stick with cash while others are all about credit.
The Case for Cash
Credit is a fairly new concept within the history of finance, which is why so many people would rather stick with tried and true physical currency.
Safety
No one has ever had their identity stolen by leaving their cash behind. Credit cards can be the key to your personal financial information, but money is just money. You don’t have to be concerned about fraud when you spend in cash.
Tangibility
Sometimes it’s easier to spend money when you don’t see it leave your bank account. When you have a wallet full of cash on the other hand, you watch it disappear as you make purchases. Many people prefer to use cash only because it helps them keep mental tabs on how quickly their money is going out.
No Interest or Fees
The great thing about making purchases with cash is you pay the item’s cost and that’s it. There’s no factoring in interest payments. You also don’t have to worry about racking up late fees at the end of the month because there’s no bill–you’re always paid up. Paying cash makes things much simpler and less expensive overall.
Freedom From Debt
With cash, it’s much harder to fall into debt. You can still overspend and end up with no money, but at least you don’t owe creditors anything at the end of the day.
Why Credit Is King
According to The Wall Street Journal, the Federal Reserve reported in June that Americans owe about $826.5 billion in revolving credit. Why do so many people rely on plastic over cash?
Safety
Yes, this was the argument for cash, but the same can be true of credit cards. The problem with physical money is if you lose it, it’s gone. That’s it. No more. Anyone who has ever had a wad of cash fall victim to theft or loss has felt the pain of knowing it’s gone forever. Credit cards, on the other hand, are just pieces of plastic. If you lose yours, you can cancel it and not lose a dime.
Large Expenses Made Affordable
Imagine if every time you needed to make a big purchase you had to wait for weeks or months until you had saved up enough to buy it. This may be doable when you decide to upgrade your television, but what if your car needs a new transmission or if there’s a hole in your roof? You can’t afford to wait. Credit cards allow you to make purchases and then spread the cost out over a longer, more manageable period of time.
Expense Tracking
Another problem with cash is there is no record of where it went unless you hold onto every receipt. Credit cards, however, present you with a neat list of transactions every month in your statement. This makes budgeting a whole lot simpler and also alerts you to any suspicious charges.
The All-Important Credit Score
It’s really hard to get by in today’s society without a credit score. Whether you want to obtain a student loan or turn the utilities on in your new apartment, you’re going to need credit. Of course, the only way to build credit is to use credit.
So which one reigns supreme? The honest answer is that it probably doesn’t matter.
People who prefer an old-school, cash-based system of finance tend to distrust financial institutions or have had bad experiences with debt. Credit users are all about speed and convenience. It all comes down to your personal preference.
Regardless, getting along in today’s world without using some type of credit is very difficult. Even if you prefer cash, you’re going to have to borrow money at some point even if it’s not necessarily on a credit card. Things may change in the future, but for now, credit isn’t going anywhere.
Do you agree? Have you found a way to get by without a credit card?