When it comes to budgeting and spending money we all have our own unique plans. Some of us prefer to track every penny. Some people just go with the flow. Some prefer using cash-only, while others go card-only. I wanted to look at the pros and cons of a card-only spending plan.
First well start off by looking at the benefits of a credit card-only (debit and credit) system:
More protection. A credit card offers protection that you simply won’t receive from using cash. From extending your warranty to having to prove your purchase, a credit card can be much more reliable.
Easier to track your spending. When you use cash you have to count all of your spare change and what not at the end of the month. With a credit card all you have to do is load up your statement at the end of the month to see exactly where and how you spent your money. This way there’s no uncertainty about your spending. You get to see where and when your money was spent.
Easier to carry. Its much easier to carry around a card and keep track of it, then it is to carry around cash on you at all times. Plus if you lose cash that you have on you, it’s simply gone forever. If your credit card ever gets stolen you can report it and have everything resolved eventually. This is a benefit that can come in handy when you need it most (ask anyone that lost cash before).
(Quick note: of course credit cards can also be used to build your credit history. Cash can’t.)
Now after looking at the pros of a card-only spending plan, we can now take a look at the negatives of this system:
Cards create a disconnect. When you use cash for a purchase you have to physically hand over the money. For some of us this can be pretty painful and uneasy. Giving over cash for a purchase can be much more painful than a quick swipe. This is where the problem exists for many when it comes to using a card to make all purchases. A disconnect is created and it doesn’t feel like any money is being spent at all.
Easier to spend money. If you only have twenty bucks in cash on you, then you’ll only spend that much. If you have a debit or credit card you might be more willing to spend additional money. Think of all of the times that you’ve picked up an extra item or two when walking around with your credit card at Wal-Mart.
Another quick note is that credit cards are widely used online (from Paypal to eBay to amazon) and most sites will store your credit card information for you. It gets to the point where all you have to do is click on the product you want to purchase and confirm it. This system can be toxic for those that don’t have a grasp of their finances. However, this convenience is also important to those that value the ease of use for shopping that online merchants provide.
Now I understand that there will be polarizing views on the credit card-only spending system. You could argue that the card-only system is more useful for those in the advanced stages of money management. Once you gain control of your spending impulses and begin to delay gratification, you can then trust yourself with using a credit card on a daily basis. The cash-only system is very useful for those that are trying to get a hold of their spending. Once you become the master of your finances you can begin to use a credit card for all of your purchases.
What do you use? Are you cash-only or card-only? Or do you mix up your spending?
(photo credit: fosforix)
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