1 of 55

Write now Article Tools

The choice between paying cash and charging credit card depends entirely on your consumer style. If you can control your spending, if you are not carried away by how easy it is to charge your credit card, and as a result you pay your bill in full every month then it is better to use credit card.

Advantages of using credit cards:

* Credit history.

You need credit cards to build your credit history. Without credit history and credit score future lenders will not know if you are a responsible borrower, and you may have problems with obtaining credit when necessary, for example, to buy house or car.

* Incentives for users.

A lot of credit card companies give you incentives to use their cards. These incentives can range from cash rewards to airline miles to gift certificates. With some planning it is possible to use those incentives to your advantage. For example, you can use your card for inevitable payments for utilities, insurance, etc and collect your rewards. With some planning you can use participating merchants and establishments where your rewards will double.

* Ease and security.

It is easier to swipe the card then to carry a lot of cash around. It is also safer. If your card is stolen you are not responsible for the charges incurred after that happened. All you need to do is call the credit card company, report that your card was stolen, and tell them which purchases are not yours.

But if you feel that you need every gadget you see advertised on TV, if you use your credit card to live well over your means, and if you pay only minimum balance every month then it is more advantageous to pay by cash or check.

Advantages of paying cash:

* Control.

You are in control of your finances. If you don't have it you can't spend it. Create monthly budget, designate enough cash to cover your bills and purchases and stick to it.

* Ownership.

You own stuff the moment you paid for it. What can be more frustrating then still paying for something bought on credit after it is broken or out of style?

* No incurred interest or debt.

You never owe interest on the credit card and you never find yourself in debt.

Sometimes it is impossible to use credit cards: at most farmer's markets, fairs and little Ma and Pa shops, and sometimes it is impossible or difficult to use cash: paying for airline tickets, hotel reservations or rental cars. But the decision of how to pay for everyday expenditures should be based on your spending habits and your goals in life.

Learn more about this author, Marina Stein.
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!