When To Use Cash and When To Use Credit for Your Holiday Spending

Woman spent all her money during Christmas shopping.
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Holiday shopping season is upon us, and that means the search for the best deals is on. Some deals are even sweeter when you use a credit card to purchase them, but then again, some circumstances might call for using cash instead. Determining which is best for you to use depends on your individual financial situation. Here’s a look at when it’s beneficial to use a credit card, and when to hit the ATM for some cash. 

Shopping Tips: Wrapping Paper, Greeting Cards and More Holiday Items to Only Buy at Dollar Stores
Check Out: 
29 Ways To Save On Holiday Gifts

Trying to Save Money? Stick With Cash

Only 40 percent of holiday shoppers create a holiday budget, and actually stick to it. If you’re already struggling to pay off credit card debt, making a budget for holiday spending and adhering to it is crucial. There’s no better way to make sure your budget stays intact than to commit to only using cash.

It’s hard to keep track of exactly how much you’re spending when you’re shopping with a credit card. An MIT study from its Sloan School of Management found that shoppers may spend up to 100 percent more with a credit card, as opposed to cash. When you shop with cash, you can see exactly how much you have left after every purchase. Plus, some local stores might charge a service fee for using a credit card, so using cash bypasses that possibility, saving you money in the process.

Make Your Money Work for You

Cash also cuts down on any potential security risks, so there’s less chance of your identity getting stolen while you’re out buying gifts. If you don’t want to carry cash, your debit card will give most of these benefits and still ensure you’re only spending the money you have. 

Pay Off Your Balance Every Month? Get a Rewards Credit Card

If you’re someone who barely uses their credit card, or diligently pays off their balance every month, then this might be the time to take advantage of some credit card’s perks during the holidays. Cards like Discover’s Discover it® Cash Back card have no annual fee, give you 5 percent cash back at different locations every quarter and 1 percent cash back on every purchase. And the Discover it® Cash Back card automatically matches all the cash back you’ve earned at the end of your first year. The Chase Freedom Flex℠  also has no annual fee, plus it gives you $200 after you spend $500 in the first three months. If you plan on spending more than $500 on gifts for the holidays, with this card, you can pocket $200 to gift yourself something special! 

Make Your Money Work for You

Want to Build Credit? Get a Prepaid Credit Card

You can still keep your budget under control, even with a credit card. Cards like The American Express Serve® Cash Back card allows you to prepay your card, so you can set an exact holiday budget ahead of time, while still collecting 1 percent cash back when you shop online or in stores. The PayPal Prepaid Mastercard® easily integrates with the PayPal app, while getting you discounts and offers at certain stores that take PayPal. In addition to reaping the cash rewards, you’re building credit at the same time, so it’s easier to apply for a loan or make a large purchase in the future. 

Planning on Doing Your Shopping All in One Place? Get a Store Credit Card

If you’ve shopped at a department store, you’ve definitely been asked to sign up for a store’s credit card. Though you’ve probably repeatedly turned them down, if you’re responsible with credit cards and tend to shop at the same store a lot, a retail credit card can be extremely beneficial. Some will offer 20 percent off your entire purchase when you sign up, which can be a pretty big savings when you’re shopping for gifts or other holiday essentials. Store credit cards also often have loyalty programs built in, where your cash back could become free money for that store. For example, the JCPenney Credit Card offers 1 point for every $1 spent using the card, and when you get 200 points, you get a $10 gift certificate to the store.

Similarly, the Target RedCard gives you 5 percent off in-store and online purchases, plus free 2-day shipping on some items. You can also earn access to promotions and extended return periods.

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About the Author

Sam DiSalvo is an LA-based comedian, writer and actor who's performed all over the country. Her written work has appeared in numerous digital publications. As a copywriter, she's worked with a variety of major brands including GoldieBlox and Thrive Causemetics. Sam loves dogs and is currently perusing leisure suits to buy for her corgi mix, Barry

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