Spending Methods - Cash, Credit or Debit
How should you make a purchase? Cash, credit or debit seems like a simple choice. However, how we pay for things has a ton of implications.
One of the main differences is that some payment methods are more secure than others, while others provide better rewards, Emotional benefits, or might even cause you to spend less of your money!
So the question is, how do you know whether you should be pulling out your debit or credit card? Or should you stick to using cold hard cash?
Credit is my favorite because it offers protection, rewards and can be easily tracked via finance apps. The negatives are if you don’t pay off the balance the interest can be substantial. I don’t carry balances on my cards so in that way I’m treating it as a cash.
Debit cards offer some protection, but please remember they don’t have the same protections as a credit card. They offer the ease of a credit card for online shopping, but they draw Manet outing your account. So if you get your debit card stolen there are risks you will not get your money back. My recommendation is credit is better if you don’t want to use cash.
Cash is the old school method. I’ll be honest I typically don’t carry cash. The real reason why is you don’t earn any rewards with it. Also, those all cash discounts are few and far between. There is also studies that find you spend less if you use cash. This is because it’s a tangible object that you hold and makes sure can’t but more than you have. Another major draw back is cash is easily lost. I’d hate to loose my wallet with a few hundred in it.
So if I had to rank these options I would rank credit first, then cash and lastly debit. The obvious Caveat is if you’re not good at managing your money pay your balance is off in full. If that’s the case I would recommend staying with cash.
There is also the longterm, dare I say moral, issue too.
When you use your credit card you (the credit card company) are creating money from nothing. The money is borrowed into existence, devaluing the current money, making all the existing money worth less.
So you may be getting a reward for using it but it also makes your (everyones) existing money and all the money in the future worth less.
The banking industry will NEVER give you money for nothing and allways find ways to makeyou pay for it.
With the way money currently works. When you use credit in any form you are taking value from EVERYONE else except the bankers.
The way banks make money on credit cards is when people carry a balance or pay fees. I don’t use cards with fees or Carry a card with a balance.