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Credit Cards vs. Paying with Cash: Which Is Better?

It’s a rivalry as old as time itself (seemingly), which will likely be argued until cash is eventually obsolete.

So, do you prefer to pay with greenbacks or plastic? Cash or charge? That’s the grand question, and one that definitely seems to be more of a preference than anything else.

These days, this question is actually not coming up as much as it once did. Why? Well, for one, a lot of retailers and other business outfits aren’t accepting cash anymore.

Take for instance an airline. Most, if not all, require that onboard purchases be made with a credit card instead of cash.

Long story short, if you want an in-flight beverage, or wish to purchase a snack or a blanket, you better have your plastic at the ready.

Of course, it can be both a debit or a credit card, but it’s got to be plastic. Your valuable cash is no good here. And it seems more and more places are following this trend.

Heck, even parking meters have credit card slots nowadays, which is actually pretty darn convenient for those of us that don’t have a cup holder full of crusty dimes and nickels.

At the same time, there are still handfuls of retailers out there that refuse to accept credit cards, largely because they’re either old school or don’t want to pay the costly interchange fees.

Either way, if you want to do business with these types, your plastic will be about as valuable as the material it’s made of.

In other words, cash is still a necessity, though so too is credit.

Cash Doesn’t Pay You Back

We know credit cards are mostly winning in the convenience and acceptance department, but another drawback to cash is that it doesn’t earn you any rewards.

These days, most credit cards come with cash back, travel rewards, gift cards, etc., etc.

That means every purchase you make with plastic leads to a little more money in your wallet.

In fact, it’s not uncommon for credit card issuers to offer up to 5% cash back on everyday purchases like gas and groceries (See: American Express Blue Cash).

Conversely, one might argue that those who use credit cards instead of cash are prone to rack up larger balances, so the rewards and/or cash back are eclipsed.

This will certainly depend on your spending habits, but the argument can be made that cash won’t get you into too much trouble on the debt front.

On the other hand, a credit card allows irresponsible borrowers to spend beyond their means in a hurry, which is definitely one of the downside risks.

[Should you pay your credit card in full?]

Do You Trust Who You’re Doing Business With?

I also wanted to highlight the relative safety of using a credit card versus using cash. If you use cash to buy something, you’ll have little recourse if anything goes wrong.

Sure, you can save the receipt and hope everything works out. If it doesn’t, you can head down to the retailer and argue your point, whatever it may be.

But you don’t get the purchase protection you’d get when using a credit card. With a credit card, the whole transaction is well documented, and most issuers offer pretty easy and straightforward disputes if anything goes wrong.

Additionally, some may offer an extended warranty to a product you purchase with the credit card.

And many offer all types of insurance, ranging from car insurance coverage to travel insurance, when using the card for purchase.

So all in all, credit cards come with a much more robust suite of offerings versus cash, but don’t come without risk.

As mentioned, there’s the chance of spiraling into debt, and the possibility that your credit card will fall into the wrong hands.

But issuers have safeguards in place to ensure cardholders don’t pay for fraudulent charges.

Lastly, it should be mentioned that credit cards can help build your credit, which is imperative to getting more essential loans in the future, such as auto loans and/or mortgages.

That said, if you’ve resisted a credit card for this long, it sounds like more work (and headache) than it may be worth.

Read more: The pros and cons of credit cards.

Published by

Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals improve their credit scores and get the most out of their credit cards.

3 thoughts on “Credit Cards vs. Paying with Cash: Which Is Better?”

  1. With all the scams taking place, you kind of have to wonder if cash isn’t a better alternative. The companies we purchase goods from can’t seem to keep our information private.

  2. While that might be true, and it certainly is frustrating having to cancel credit cards and deal with fraud, most credit cards provide zero liability so you don’t have to worry about fraudulent purchases. With cash, there are never any guarantees.

  3. If you aren’t responsible enough to hold a credit card, use cash. If you are, get rewarded left and right for using plastic.

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