Field Notes Blog > Cash vs. Credit Cards

  • Cash vs. Credit Cards

    February 08, 2019

    Featured Writer: Matt Speacht, AgChoice assistant credit analyst manager

    When you reach into your wallet or purse to make a purchase, do you typically use cash or a credit card? Before making that decision you should weigh the pros and cons of each:


    Reasons why you might want to consider using cash:

    • Control of your money: you can only spend what you have.
    • Cash accepted at all brick-and-mortar merchants.
    • When you swipe plastic, retailers often ask for additional information such as an email address. With cash, no one asks you for your email, so it cuts down on some of the email marketing. When retailers don't have your email or mailing address, that information can't be stolen in a data breach.

    Reasons why you might not want to use cash:

    • Using cash does not help build your credit score.
    • Unlike credit cards, cash has no consumer protection. Once it's gone, it's gone.
    • Cash cannot be used for online purchases.


    Credit cards

    Reasons why you might want to consider using credit cards:

    • Timely payment will help improve your credit score.
    • Carrying a card is much safer than carrying cash. With a credit card, replacement cards are easily obtained and your liability for unauthorized purchases is generally limited depending on the terms of your creditor.
    • Lots of credit cards offer reward points or cash back. These can add up!

    Reasons why you might not want to use credit cards:

    • Credit cards have high interest rates when balances are not paid off at month-end.
    • According to a popular study by Dun and BradStreet, people spend 12-18% more when using credit cards instead of cash.
    • Not all credit cards are accepted by all businesses. Some will only accept Visa or MasterCard.

    So what’s the final answer on which to typically use? It depends. If you are someone who has difficulty paying off your credit card bill or sticking to a budget then you should consider a cash budget where the majority of your purchases are made with cash. However, if you are diligent about paying off credit card bills at month-end then credit cards, and their reward points, are probably a good option.

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