Cash VS Credit Cards Which Is Better?

Both Are Smart Choices 

  It’s been said that cash and a debit card can do everything that “credit cards” can do – except put you in debt.. But what is debt? 

Understanding Debt – Debt is when you borrow money or owe money.. “Debt” is used as a method of making large purchases that normally you can not afford under normal circumstances. Well it’s safe to say if you’re already broke living paycheck to paycheck – barely able to make ends meet, then you probably shouldn’t be in or have any type of “credit card debt”. Maybe you’re already in debt and the reason why is because of your credit cards.. This read is to help you understand when to use credit cards verses when to use cash..

Understanding Cash – What is cash? It’s basically to pay for something, to obtain a profit, a way to get paid, or simply “financial freedom” for some.. Lets say you have $1,000 – $5,000 (or more) to your name in your “savings account” or cash “saved money” at home and it’s free and clear – your money – It’s basically just sitting there for whatever reasons and/or purposes.. You have the power to do whatever you want with it – right? Now when something happens say an emergency, car repairs, unexpected bills, vacation, a death in the family, a new car, a new baby, a down payment for a new home, or you want to help out a loved one and/or a friend out.. You’re now borrowing or tapping into your “savings account” or cash “saved money” – and sometimes it’s not the purpose of your “saved money” was originally for.. You basically spend what you have – when it runs out it runs out.. Also you can make investments using your “saved money” to hopefully make more money (if you like to gamble – you know how it works), or buy and resell, stocks, affiliate marketing, eBay, Facebook Marketplace, etc… It’s very easy to spend money or cash verses having it verses saving it..

 Understanding Credit Cards – A credit card is basically a small plastic card that lets you “borrow money” from a financial provider. If you borrow funds for a significant period of time, you’ll pay a fee for the privilege – also called “interest”. Beware: A credit card isn’t free money, and you’re always expected to “pay back” whatever you borrow. There will also be a maximum “credit limit” that you can borrow at a time – so it’s best that you NEVER keep all your credit cards “MAXED OUT”.

 

Remember There’s SMART DEBT and Then There’s STUPID DEBT 

 

  Credit cards give you more “spending power”  that’s a given, without the inconvenience of carrying around large amounts of cash on you or your “saved money”, which in most cases you will have a debit card. You also get the convenience of purchasing items NOW (using your credit card VS your own money) and then paying for that item and/or items later – which gives you a monthly payment in return.. 

  Quick example say you have a $1,500 credit card limit, and something costs $1,000 or you go on a shopping spree to many different places – you will use your “credit card” instead of spending your “cash” or “saved money” – then in return you will make a small monthly payment to repay that debt and/or pay down and pay off the amount that you just borrowed or placed on that credit card.. Whether you have the $1,000 or not – your “credit card” comes in handy as long as you can afford the monthly payments.. Paying with cash eliminates the possibility of overspending, or living paycheck to paycheck.. With cash, your spending is limited to what you have on you or “saved” in most cases. Credit cards on the other hand – they allow you to spend what you have “available”, providing you with “additional purchasing power” verses using up all of your money or “saved cash”..  Opting for cash over credit cards can still be a good thing, however – individuals tend to spend more with credit cards than with cash and/or with their debit card – just be smart about it. 

 

When Should You Think About Getting A Credit Card?

⦁ To build or rebuild your credit. A credit card isn’t the only way to build credit, but it’s an excellent choice. When you use your card and consistently pay your bills on time every month, your credit score will increase. It’s a great idea to start as soon as you feel ready to build credit.
⦁ It’s a more convenient way to pay. Instead of carrying a lot of cash or writing checks or tapping into your savings account -you can simply swipe your card.
⦁ Make a large purchase and pay it off over time. If this is your primary reason for getting a credit card, consider whether the purchase is essential. Also, make sure you can pay off your purchase in good time.
⦁ Earn rewards or special offers or sign up bonuses. As you spend with your credit card, you may earn cash back that you can redeem for bank deposits or statement credits. Or you may earn points or miles that you can redeem for travel, gift cards and much much more.

 

When Should You Avoid Getting A Credit Card?

⦁ If you seem to have difficulty controlling your spending.
⦁ You have the habit to overspend, consider holding off on a credit card. You may rack up huge amounts of debt that will be difficult to repay. Work on solving your spending problem, or stick to debit cards – or cash at home..
⦁ If you can’t pay larger amounts toward your monthly balances. The longer you carry a balance, the more interest you’ll accumulate. Interest can be surprisingly expensive in the long run. But normally if you plan on NOT using your credit card multiple of times, then making that minimum payment every month is just fine..
⦁ If you don’t have the right credit score. Find out what your credit score is before applying for a credit card. It’s certainly not fun getting denied. Also, applying for too many cards at once – can significantly affect your credit score – and will put your credit report at risk for any future financial help..

 

 

CASH VS CREDIT Cards The Choice is Really Up To YOU

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  You may have heard people tell you to avoid credit cards, don’t get involved, it’s a bad move, a horrible choice and/or a bad idea, even it can ruin your financial life – so pay for things with what you have (cash or what’s in your savings account using your debit card) right? Honestly that is not true.. As long as you know and understand how “debt” works and you’re not maxing out all your credit cards to the point where you can no longer afford the monthly payments (because of the high interest) or considering filing for bankruptcy – credit cards can actually be your “friend”.. We get it and the truth is – life happens and when you use your credit cards – YES you may be borrowing money for what ever reasons – but as long as you can “afford it”, – there is no real harm being done..

  Example: Lets say you have $500 left over every single month.. This is money that you would normally put up into your “savings account” or “cash” that you keep at home (that you use for your personal use) like clothes shopping, new shoes, out to eat, vacations, entertainment, etc.. Think about this real quick.. Say you have $2,500 in your “savings account” or $2,500 “saved money” cash at home.. Something comes up and you have to now use or spend all of your $2,500 and now you end up completely broke without any cash put aside.. For you to get any of your savings back you will have to clearly “save it up” again.. Lets put this into perspective now.. You have $500 “left over money” every single month – this is after all living expenses is paid.. And say you have $2,500 in your savings account or $2,500 cash at home.. You have the option to purchase anything as long as you have the money for it – right? Now what if you had a credit card with a $2,500 credit limit, what do you do? 

  Do you pay $2,000 cash or from your “savings account” or do you put $2,000 on your $2,500 credit card?? At $500 left over every single month – you actually can afford the monthly credit card payment out of your “left over money” that’s called SMART DEBT.. As long as you’re responsible enough and can afford the monthly payments – the credit cards can serve as more “spending power”.. When you have multiple credit cards the overall combined amount or “credit limit” on “all credit cards” – is probably going to be more than what’s in your savings account or cash at home.. 

 

 

We Can Compare Cash And A Credit Card As An Example

  If you spent $2,500 on your credit card you have to make a monthly payment to pay it back – right? But if you had no choice and had to spend $2,500 out of your savings account or cash at home – it’s now considered “gone” and you have to now “save up” “your money” to get it all back.. So the money that you normally would be putting up or back into your savings account or keeping it at home will now function as your monthly payment towards your credit card/cards verses saving or putting up your “left over money” every single month (back into your savings account or kept at home) – you will now use it towards your “credit card payments”.. Man I would love to have a new computer but I don’t have $2,000 not even $1,500 for one.. Applying for a credit credit through Dell Financing may be your best option, with payments around $35 – $44 a month (or more depending on what you finance) verses paying out right for a brand new computer..

  We all hate car repairs.. You need new tires a tune up and brake work done – and it will cost you $1,200.. A lot of time people may or may not have that in their savings account or cash at home – sometimes it’s all they have.. The power of a credit card comes in handy right about now – you may consider applying for a Firestone credit credit.. Swipe your credit card – you will now have a small monthly payment and the best part about this method is that $1,200 is still in your savings account or at home and you’re back on the road!! But I have to pay it back? Of course you do, but would you rather be “completely broke” or just make that monthly credit card payment to still have your savings untouched??

 

 

Bottom line: The choice is really up to you.. Cash and using credit cards – both are considered smart choices and they both have their advantages and disadvantages.. At the end of the day nobody can tell you what to do when it comes to spending your cash, using your credit cards or managing your “hard earned money”.. Just be smart about it – and don’t get to carried away.. REMEMBER THERE’S “SMART DEBT” AND THEN THERE’S “STUPID DEBT”..