These days, we have an unlimited amount of methods to purchase items. We can use credit cards, cash, checks, PayPal, gift cards, and even a variety of phone apps. However, the two most common forms of payment are still cards and cash.
Many people have told me that they spend way more money with their credit cards than they do with cash. I wasn’t sure if this was true or not so I decided to do an experiment and move to a cash only system.
It turns out, they were right! When I did this, I was absolutely amazed at how aware I was of my spending. As a personal finance blogger, I pride myself on keeping good records and a tight budget; however, using only cash made all the difference in the world.
When you physically hand over cash, you know that you have less to spend the next week. When I use a credit card, I can keep a running total of my balance in my head, but it doesn’t have the same feeling as paying for something with cash. This is especially true with an envelope system. When you look down at your envelope and you see the bills disappearing, you know you are spending too much. It’s a great way to stay accountable.
That being said, I can’t argue with the benefits of credit cards. So, let’s take a look at all the pros and cons of each below.
Pros for Using Cash
– It makes you less likely to spend needlessly.
– It’s easier to tell yourself no when it comes to specific purchases.
– It’s faster to check out with.
– You can’t get your identity stolen or compromised as you can with credit cards.
– It’s accepted everywhere.
Pros for Using A Credit Card
– It’s very convenient.
– You can often get your money back if it’s stolen and used improperly. (It’s much harder to prove that a thief stole a specific amount of cash.)
– You can earn amazing points and bonuses for travel, hotel, and gift cards.
– It takes up much less room in your wallet.
Cons for Using Cash
– Carrying around a lot of cash is dangerous. If your wallet/purse is stolen, you could lose an entire week’s worth of money or more.
– It’s harder to track your spending.
Cons for Using Credit Cards
– They are not always accepted everywhere.
– They can get frozen or disabled for a variety of reasons.
– They make it very easy to spend, as you are not physically “seeing” your money disappear.
As you can see, there are definitely pros and cons for both methods of payment. For now, I am using cash and enjoying the challenge of staying within my budget every week. However, when I have more time and more flexibility, I will definitely start to seek out more credit card points in an effort to travel for less.
What type of payment methods do you use? Do you prefer one over the other?
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