Cash or credit? What is better?
Credit card frequently touts that you earn with each spend, in the form of rewards, but this does not benefit the time-tested greenback. Using a credit card means you are burdened to pay every month as it carries a balance. The cash is not an apparent choice. There are drawbacks, too. It is risky to carry cash and beyond banking hours it is a pain. Here are a few things pointing out the financial sense to understand cash or credit, what is better.
Cash is universally accepted. There is a hard limit as cash works as enforcement on spending. With cash, it is plain that if you run short of cash, it is the end.
Cash is a universal solvent that carrying cash to a meaningful amount in the city limits is helpful and useful in traveling. Many places have cash-only lines and nowadays, these are the shortest queues moving faster. Having some cash hidden as safe money helps some midnight calls to fill at a gas station.
If you are looking to get a deal, it is possible only with cash. Service providers and small retailers give discounts to customers paying cash. The gas stations favor the cash payers and there is an added benefit with cash payments. This is because as they come to pay in cash, the travelers go for some candies, or water bottles, and a few high-margin products that are not saleable to people paying at the pump using their cards.
Credit cards considerations
Credit cards can be used everywhere and it allows spending more than required. There are advantages and disadvantages. The credit cards have no spending limit that you can use the credit limit in one day. Hotel stays prefer payment through credit cards and it includes paying for rental cars. They accept credit card payments only. A cash-only hotel is at a security risk that the hotels prefer credit card payment. Credit cards lost is not a huge threat as the transactions on the credit card is not over $50 as an unauthorized activity. Cardholders are not demanded the loss of $50. The credit card offers rewards and perks as an advantage over debit and cash. The travel cards pay in miles, points or statement credits. The bonus categories enjoy on gasoline or groceries 5%.
Drawbacks of cash and credit
Cash has its share of shortfalls. It is risky to carry cash around. It can get lost or stolen. The United States has over 425,000 ATMs, but when you are in dire need of fast $100, there is none nearby. The withdrawal fee has increased than they earn interest in their accounts. There are withdraw limits that you cannot get cash over $400 or $500, a day. The bank branches are open in banking hours and so getting cash more than you can withdraw beyond the bank functional hours is not easy. Credit cards pile on the budget and create a burden for people lacking responsibility for spending within a budget. The credit card accounts carry balances. Paying insurance, car loan or something else includes convenience fees of 2 to 3% and it adds on $1000 spending around $30 as 3%.
Finally Consider the practicality and use cash and credit. Both have pros and cons. Spending within the budget using cash is the best. Likewise, spending on credit cards within limits keeps you safe and you can enjoy ancillary benefits of purchasing protection that your information is secure.