5 of 55

Write now Article Tools

In our plastic money world the temptation is to charge everything onto the credit cards in our pockets. However this is a very dangerous situation and one that you must take control of. Unless you are in a position whereby you pay the balance in full of your credit card bill each and every month, then paying by cash should be an option you must consider when out shopping.

If you keep any balance on your card, any further purchase charged to your account will be subjected to interest fees the following month. These extra charges can increase your spending by around 10-15%, depending on the rates given by your credit card provider. The problem here is that it is difficult for people to realize this additional money should be mentally added at the time of your initial purchase.

One of the biggest advantages to paying by cash is that when it actually comes to handling and passing over the physical dollar bills, people do think more about the amount of money they are spending. The disadvantage is when you are out shopping for several items; people do feel uncomfortable carrying large amounts of cash. Another reason why the credit card has become so popular.

If like so many people today you are trying to budget your money and be more aware of your spending habits, then leaving your card at home and using only cash is one of the best ways to control your finances. Having only enough cash in your pocket for the day's shopping trip, enables you to look around to find the best prices and when dealing with suppliers you may be surprised at an offer of a discount.

There are however certain times when using your card is advisable, on any larger priced tickets or maybe vacation flights. Your credit card company offers you protection on your purchases should any dispute occur with your transactions. Unfortunately reclaiming back any cash paid out can become a lengthy legal process.

Returning back to the idea of our plastic money world a lot of consumers today view debit cards as cash. Unfortunately in reality this is not having the same effect and people are in fact charging their debit cards in the same way as their credit card. The downside of these actions is that using a debit card for repeated shopping trips is deflating their bank accounts much faster than they had anticipated. Receipts must be totalled daily.

So unless you really are paying the balance in full of your credit card bill each month, then cash must be the only way to shop in order to keep your spending under control and your financial situation in hand.

Learn more about this author, Lucy May.
Click here to send this author comments or questions.

Add your voice

Know something about When to pay cash and when to use a credit card?
We want to hear your view. Write now!