Cash Vs. Credit Cards — What Should You Prefer?

It is a widespread belief that cash is always better than Credit Cards. You can pay for the products or services immediately. In the olden days, there was no concept of Credit Cards. Hence, cash was the only option. However, the present generation is more comfortable with cards. They would any day prefer to swipe their cards and pay for it later.

Why do people prefer cash to credit or debit cards?

Cash purchases seem real. It feels as if you are making a purchase. Cash has a feeling of anonymity. You cannot trace cash expenses as quickly as you can do digital transactions. But, are they better than Credit Cards? The answer is NO. Credit Cards are always preferable to cash for various reasons.

· The convenience factor

The most significant advantage of using Credit Cards is that you need not carry cash with you in large quantities. It is handy when you have to make big purchases. Hence, if you wish to purchase the latest smartphone, would you prefer to carry cash or would you like to use your card? It is not convenient to take a large amount of cash with you all the time. Hence, it becomes easy to swipe the card and pay for it later on.

· The safety factor

Carrying large amounts of cash is unsafe. Someone can steal it. You can misplace it. Anything can happen. You have to exercise extra care when you carry cash. Once you lose your money, it is difficult to get it back. You can say that you could lose your card as well. However, you do not lose your money when you lose the card. You can block your card and ensure that your money is safe.

Credit Card companies have some form of limited liabilities clause in place. You can check for the Credit Card Offers When You Apply Online. These liability clauses ensure that you are not liable for the transactions made on your card after you have reported it stolen. You get a new card with a different number.

· Cards give you more power to spend

When you use cash for spending, you limit your spending. The Credit Cards, on the other hand, allow you to buy now and spend later. Credit Cards have a specific billing cycle. You get your card statement at the end of each billing cycle. The bill gives you a list of the expenses made during the month. You have to pay the entire bill on or before the due date. You have the facility to pay an amount equal the minimum amount due. It is usually 5% of the outstanding bill amount.

You can keep your card alive and avoid paying the late payment fees when you pay the minimum amount due. However, you lose the benefit of the interest-free period when you opt for paying the minimum amount due. When you use cash, you do not have this option.

Credit Cards are beneficial when you make big purchases. You can pay the amount in instalments.

· Credit Cards help you save money

Credit Cards allow you to accumulate rewards points. You can redeem these points for attractive gifts. The co-branded cards like travel cards enable you to redeem the air miles points for air tickets, hotel booking discounts, and other cashback offers. The fuel cards give you the option of getting free fuel. Some cards have facilities where you can save up to 5% of everyday spending. You have other options like discounts on dining and so on. In short, you can save a lot of money when you use Credit Cards.

· Credit Cards help you build a good credit history

When you apply for Credit Cards, banks look at your credit history. A good credit score makes it easy for you to get various kinds of loans. Credit Cards help you build up a good credit history. Make your card payments on time and ensure you build up a good repayment history. Utilise your cards smartly and maintain a perfect credit utilisation ratio. The ideal ratio is around 30%.

You can see that Credit Cards are better than cash in various aspects. Cash is better in one aspect. Compulsive spenders would find cash as a better option because it has the power of limiting your purchases. It can become difficult for credit cardholders to control their spending habits, especially if they belong to the category of compulsive spenders.

Also Read: Utilise Your Credit Card to Buy Gifts for Your Loved Ones This Eid

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