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Cash vs Credit Card: Which Is Better and When to Use Each

Nowadays, buying is considered a necessity. It’s a staple in anyone’s day-to-day activities. To live an easy, comfortable life (which we all dream of having), many tend to buy even the things that their paycheck cannot afford. And of course, we cannot miss the word “payment” when we talk about buying. These two words are inseparable. Without payment, buying is impossible. In recent years, just like how buying patterns and trends have changed, payment methods have transformed as well. There is now a multitude of ways for customers to pay fast and easy. But among this myriad of payment forms, two remain the highest pointers—cash and credit card. In this article, learn the pros and cons of handing your greens and swiping your plastic in the battle of cash vs credit card.

Cash vs Credit Card

Wherever you go to pay, you will always encounter the question: cash or credit? This is an old-age question that we, customers, still struggle to answer even now. But why do we find it difficult to decide? It’s because we lack the knowledge of which and when each one is better than the other. In this article, we mapped out some key points to help you pick the better option in every situation. But before anything else, we want you to be open. We will be showing you the distinct advantages and drawbacks of handing your greens and swiping your plastic. How you decide which method is right for you is your responsibility.


People who experienced or seen others with credit card debt-related problems will always prefer cash as their payment method. They are afraid of the horror stories that come with a never-ending cycle of revolving debts. This may be a great factor in why the 2018 Global Cash Index of PYMNTS shows that 24% of US citizens make all their purchases in cash. But this doesn’t make cash your obvious choice every time you pay just because the majority favored this payment method. You have to know that it has its downsides, too. Read on below to learn the hits and misses of paying with cash.


  • Helps you limit your spending.

Trust us, cash is your ultimate budget-friendly option. The physical piece of paper you see leaving your hand impacts your buying attitude. Psychologically, we spend less when we use cash because we can see quickly how much is left of us than with credit cards. The poll result generated by LendEDU says that 42% of the poll respondents believe that seeing the physical transaction taking place helps them cut their spending. Besides, for some, counting their paper money gives them a better appreciation for their savings and makes them less likely to overspend.

  • Always has its place.

There’s no denying the convenience of cash. It is almost always accepted everywhere. Thus, keeping a little on your hand is a great idea in case of an emergency. Isn’t that such a relief that you have some money to pull off your pocket when you purchase from a vendor who only accepts cash?

  • Makes you build a better relationship with the things you buy.

Sounds intriguing, right? But did you know that one study revealed that consumers who pay in a “more painful” way, such as cash, felt a stronger and deeper connection to the item they bought and the place it was bought from?

  • Promotes healthier purchases.

This is somehow connected to the #1 pros of using cash. Since you are conscious of your money, you are more likely to say no to impulsive buying. Your mindfulness controls your urges to buy unhealthy food.

  • Allows you to make small purchases at a small store.

Credit card transaction is charged 2%, on average. Thus, for every dollar you spend buying on something at small stores, these small business owners are losing two cents off the top automatically. Since this amount makes a big impact on these small businesses, they required minimum purchase for using a credit card.


  • Is the most vulnerable to theft.

Carrying a lot of cash can be risky, as it’s easy to lose with a little chance of it being returned with the money untouched. Besides, paper money can’t be readily traced when lost or stolen.

  • Has ATM usage fees.

Despite having 25,000 ATMs in the United States, finding a nearby one when we need one seems like a struggle. Unfortunately, when we find one, the fees are exhausting. The non-customer withdrawal fee at the average ATM was $2.90 in 2016 or about 2.4% of the average ATM withdrawal of $122. With this figure, you can say that many people spend more on ATM charges than what they earn in interest on their accounts. Besides, it is as if you are paying for the privilege of accessing your own money.

Credit Card

Credit Card offers a long list of benefits that cash doesn’t. But just like anything else, it has its share of pitfalls, as well. When not used responsibly, a credit card can give you months, years, or even a lifetime of a horror story. Here are some points for you to fonder before deciding whether to swipe your card.


  • Is the best option for your travels and leisure activities.

If you love to travel, a credit card is the best payment method for you. You can use that plastic card for almost everything, from booking your trip to paying for the hotel and car rental with just a few clicks. Less hassles, right? Also, the best thing is select credit companies offer travel insurance on top of the good travel rewards they give to their patrons.

  • Gives rewards.

Most credit card firms provide highly competitive rewards programs for using them. You can start earning points that you can later use in exchange for merchandise or hotel stays, miles that can be used toward airline tickets, and even cash back just by using the card in paying. Above this offer, you’ll also enjoy purchase protection benefits.

  • Has stronger fraud liability limits.

Credit card users are protected from fraudulent transactions by the Fair Credit Billing Act. This act limits users’ fraud liability to $50. However, in practice, most credit card issuers waive that requirement by offering a zero dollar fraud liability policy which means that consumers have no obligation for unauthorized purchases on the credit card account. On top of these, credit card users are even protected when a charge is authorized, but the goods or services purchased are not delivered, or what is delivered is not as described. In these cases, cardholders can file a dispute against the merchant, an option that is not available to users of cash, checks, or even debit cards.

  • Extends the warranty of items you bought.

Credit card payment offers a way to protect your major purchases. Most card issuers provide purchase protection and a prolonged warranty for items bought with the card. For instance, Visa doubles the manufacturer’s warranty, up to one year; while MasterCard similarly doubles the warranty, offers 60 days of price protection and even insures the purchase against theft or damage for 90 days.


  • Offers tricky short-term teaser rates.

Oftentimes, a low-interest rate may seem like a good deal, but many credit card owners are surprised to find that the rate was only temporary. If you don’t read the fine print, you may pay far more in interest than you expected.

  • Is a prime target for scammers.

Credit cards and other electronic forms of payment carry unique dangers. They can be stolen, their numbers can be duplicated, and they can be used to steal your money and identity.

  • Can lead you to mounting debt.

Paying via your credit is essentially borrowing. And you’re not borrowing for free. If you weren’t able to settle your balance in full, charges and interest rack up. In other words, if you carry a balance, all your purchases will end up costing you a little more.  

Bottomline on Cash vs Credit Card

In conclusion, to identify which payment method works best for you, you have to consider many different factors. There are certain situations that cash wins where credit card falls flat. But other cases may call for a credit card. Be decisive and wise in spending.


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