Here Are the Compelling Reasons Why You Should Spend With Cash vs Credit
Wherever you are in your life or work journey, one rule makes a whole lot of sense. Use cash whenever you need to pay something. In paying money or cash, you avoid sinking into a debt hole. Which payment type is best if you are trying to stick to a budget? As they say, better cash it.
By paying cash for a purchase at every opportunity, you facilitate two important things that can prevent a paycheck-to-paycheck existence. The latter means getting by with a main income, which tends to get depleted even before the next payout comes around.
Those two things that paying with cash lead to are: 1) being able to easily track where your money is going; and 2) being able to stick to a budget. Indeed, choosing to spend and pay with cash vs credit card can prevent your personal funds from being zapped.
To illustrate, go to an appliance retail store and check the prices for cash vs credit card transaction. Paying with cash emerges as the more cost-efficient option. You can nip overpaying credit card transactions in the bud if you pay in cash.
Notwithstanding what credit card companies and users say – that responsible use of plastic can help build up one’s credit score — it remains wise to keep some cash at hand and use that cash versus credit card. You eliminate anxieties caused by coming close to a maxed-up card and being unable to use the plastic during emergencies. In such situations, you are better off with cash or debit card.
In brief, here are the most compelling reasons why one should make a regular habit of paying cash. First, if you spend with cash, you avoid mounting debt that includes interest that accrues over time, in effect making the card user obligated to pay interest on the interest that accrues each month.
Second, when you adhere to a `pay with cash’ rule, you realize that items that tend to be beyond your current budget are unnecessary, after all. When you put off purchases, it allows you to check out better deals or better products offered in the marketplace, since you do not readily use plastic card to complete the purchase. Cash also happens to be accepted almost everywhere.
These advantages of using cash ought to be motivation enough for lots of people. Even business owners who pay in cash rather than plastic for purchases reap benefits. They are able to make it a habit to spend within their means.
They also get to avoid making credit card advances with very high interest. So yes, among the major reasons why you should pay with cash is you will not run up debt. In effect, cash is still king.
The third compelling reason to frequently pay in cash is that such cash or money transactions offer anonymity. Spending with cash eliminates the nerve-racking effect of credit card hacking incidents and other criminal techniques to steal card information/personal details, such as phishing.
Credit card hacks necessitate quick action, like ordering a replacement card posthaste, checking and rechecking and securing online accounts, and even signing up for high-priced fraud protection. You get to eliminate all of that by refraining from using a credit card and opting to pay in cash instead.
Spend With Cash, Avoid the Pitfalls
By paying cash for a purchase you cut out financial stress because more often than not, you spend less. For average-earning individuals, it can be very beneficial to veer away from overspending using a credit card just to maintain a desired standard of living.
If you cannot pay off the full balance each month after you have used your credit card, it is a sign that you may just rack up debt. If you are a disciplined plastic card user, combining cash and credit card use may be fine to some extent.
The benefits of using cash are also not lost on startup business owners. Paying with cash at hand instead of charging just about every business requirement to credit cards minimizes the pitfalls.
As experts say, every business owner should have a clear understanding on how best to navigate personal finances in and outside the business they run. They should keep in mind credit cards cannot always be used as a stop-gap measure. Besides, there are stores that may refuse to run your credit card for very minimal or smaller purchases and prefer cash to credit card.
Tren Griffin, a Microsoft executive and author of the book, “A Dozen Lessons for Entrepreneurs,” presented in his book that oftentimes, running out of cash or money stems from a business losing focus and diverting resources unnecessarily. Over expanding or premature scaling, and the resulting accumulated debt, can drain savings and earnings.
Now for those who do get into heavy credit card debt plus other financial obligations like monthly car loan payments or student loans, one of the options may be to seek refinancing or loan consolidation. In the end, the solution is cash, and it all boils down to being a responsible borrower.
Make Your Money Grow Instead of Go
People who have been saddled with credit card debts (including those who have withdrawn cash on credit cards) but gradually paid them off can attest to how liberating it can be. Try practicing a “no credit card spend” for months. The big change in mindset can lead to big savings.
Being money-savvy starts with a massive change in spending habits, especially if you tend to be an impulse buyer. Always setting aside some extra cash you earn but noting that it seems to take ages for it to really grow? It may be time to ask for a raise, get a side hustle or a passive income generator.
A good investment vehicle may be just what you need. When checking out investment avenues, tread carefully. Know your risk tolerance, and update your knowledge about your chosen option, whether it is stock investing, cryptocurrency, or an alternative investment like peer-to-peer lending (P2P).
With P2P, the investor or funder shells out a minimum amount of cash and earns from the interest on the loan. As for a person looking for a loan to be able to settle bills and pay with cash, the P2P platform serves as channel to get connected to individuals who happen to be looking to lend part of their investible surplus funds.
When borrowing cash or money to settle debts, or for education, home improvement, business expansion or other purposes, choose the option that offers flexible interest rates. Making credit card advances will just add to greater debt, since interest is high.
Take the right financial path — whether you pay cash for everything, use cash credit, or combine cash and credit. Stay focused in reaching your goal, be it freedom from debt, or a thriving business, and let a reliable P2P funding platform like Blend.ph guide you how.
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