Credit Card Vs Cash payment: Which one should you prefer?

In today's fast-moving world, it's easy to pay through credit cards whether you have cash or not. This is because for making payment pulling out the cash, counting it, handing it over, and then waiting for change simply takes time. But before paying through credit cards or through cash you should know some important things and here we go. Payment in Credit vs Cash

When you pay with cash, a percentage of your funds is immediately reduced. And once you purchase anything and pay in full, the deal is done.

You can borrow money using a credit card. When you make a transaction with a credit card, your lender pays the merchant on your behalf. In general, you are permitted to use the card endlessly up to the predetermined limit. When you receive your bill later, you pay the remaining sum. You risk incurring interest fees if you don't make the full payment by the deadline. You can also be charged additional costs, depending on the card. When you should use cash for payment?

You can think about utilising cash at any time if you have any. Most places take it, it's quick, and there's no chance of identity theft. Whenever you want to save money use cash. You may be subject to interest costs and late fees if you are unable to pay off a credit card balance in full by the due date. However, you normally won't be charged any fees or interest when paying in full with cash.

When you wish to limit your use of credit use cash. According to the Consumer Financial Protection Bureau (CFPB), credit utilisation should not exceed 30%. Therefore, you can think about using cash if you realise that you are going above that.

Cash payments are more practical in many scenarios like you might want to give a driver or waitress a tip or when a market vendor only accepts cash. Cash can feel simpler at times. When you should use a credit card for payment?

When used wisely, utilising a credit card can provide a lot of benefits. For instance, credit cards can offer rewards and other benefits in addition to giving you extra purchasing power when you need it. When you want some rewards for making a payment, use a credit card. You might be able to accumulate money, miles, or points with a rewards credit card through your transactions.

When you want to build your credit, going for payment through a credit card option is good. Utilising credit cards responsibly can help you improve or restore your credit.

When you want to feel in control using a credit card for payment is a good option. Your credit card may also have some digital tools or features for monitoring and managing your finances.

Use credit cards, when you’re traveling. Some credit cards don’t charge foreign transaction fees. You can check the fees section in a card’s terms and conditions to see whether yours is one of them. Advantages of Paying Cash over Credit:

It can seem more convenient to use credit or to pay with cash, depending on your perspective. But before you reach for your credit card the next time, think about these advantages of paying with cash as opposed to your card:

1. Credit card interest accruals increase over time

You will end up paying more in interest than the initial amount of your purchases if you don't pay off the entire balance on your credit card each month.

With interest charges increasing with increasing balances, that Rs 50 pair of shoes may eventually wind up costing you Rs 100 or more. Since interest accumulates, you are essentially paying interest on top of the interest that you already have each month.

2. Paying with cash instead of credit helps you manage your debt

Debt can accumulate quickly, yet it can be difficult to break out of. If you don't pay your bills in full each month, you're not only spending more money overall overtime on items, but you're also piling up more debt.

3. Having cash on hand makes budgeting and adherence simpler

It's simpler to keep track of your expenditures when you pay with the cash you've budgeted for items. It also serves as an eye opener and serves to keep you grounded in reality regarding how much money is coming in and going out from week to week or month to month.

These are just a few of the benefits of paying with cash as opposed to a credit card. That's not to say there aren't situations or times when using a credit card makes sense, but you should always use caution and have a repayment strategy in place. DISCLAIMER: No financial information whatsoever published anywhere here should be construed as an offer to buy or sell securities, or as advice to do so in any way whatsoever. All matter published here is purely for educational and information purposes only and under no circumstances should be used for making investment decisions. Readers must consult a qualified financial advisor prior to making any actual investment decisions, based on information published here. Any reader taking decisions based on any information published here does so entirely at their own risk. Investors should bear in mind that any investment in the stock market is subject to unpredictable market-related risks. The author has no plans to invest in this offer and also the author does not recommend investing in any offer published on this website.