Cash vs. Credit: Which Is Better to Use?

Even if you rely solely on credit cards, you still have to use cash occasionally. Which option is better: credit cards or paper bills? It depends on numerous factors, starting with your financial goals and ending with your monetary habits. Here are the pros and cons you need to consider.

Credit Cards

Credit cards are a ubiquitous payment method as they are an effective and quick way to pay for your Internet purchases, utilities, and many other things. One of the key pros of a credit card is building up a good credit history that will allow you to take loans on the best terms. You may use the online cash app, a platform that helps you find an optimal lender, or visit your local banks. Anyway, by having a solid credit score, you will borrow money at lower interest rates and get more favorable terms.

Credit Card Advantages

• Security. Fraud protection is one of the crucial pros of credit cards. For instance, if someone steals your cash, you have little chance of returning the entire sum. But if you lose your credit card, you can immediately block it. A suspicious activity on your card will provoke a fraud alert notification from your bank, which is also a plus.
• Cashback rewards. Numerous cashback apps allow you to save money by providing a rebate on your purchases. Luckily, there are many apps on the market, ranging from Fetch Rewards, which allows its users to gain reward points and exchange them for gift cards, to Upside, which provides cashback from restaurants and gas stations.

Credit Card Disadvantages

• Interest charges. Late fees and interests, annual and processing fees, these are the factors you need to watch out for if you are a credit card owner.

Cash

Using paper bills and change can also come in handy. Although you won’t get anti-fraud detection or build credit with cash, using cash still has its benefits.

Cash Advantages

• Saving money. If you pay with cash, you won’t need to cover the additional processing fees, which will save you some money.
• Emergencies. Not all businesses accept cards. Small shops, gas stations, and mom-and-pop stores often deal with paper bills only, as they want to minimize ACH processing fees, so it is better to have some cash just in case.
• Convenience while traveling. When on the road, having cash is a definite must. Whether you need to pay for a cab, grab a can of soda, or give a tip, paper bills will save you a lot of trouble.

Cash Disadvantages

• Costly withdrawals. You are unlikely to have all your money with you. If you need quick access to cash, you will need to use an ATM at some point, which will cost you withdrawal fees.

When choosing between cash and credit cards, you have to account for their pros and cons. Although credits are more secure, it’s better to always have some cash on hand, especially in emergencies. Ultimately, you don’t have to use only one option, as paper bills can easily complement your credit cards.