Hey all – I’m on the fence. Can someone talk me out of it, or should I go back to being a credit card user because there are obviously credit card advantages.
Several weeks ago I asked the question Does spending cash really save money when compared to credit cards? My conclusion was that people spend less with cash. The more I have reflected on that post, I feel it is necessary to follow up with a more complete look at advantages of buying with credit cards compared to cash. Just because something is cheaper (as I believe using cash is) does not necessarily mean it is a better choice. I do a lot of things that I know are not the “cheapest” thing – like drink Dr. Pepper. There are cheaper beverage choices, but occasionally I like a little fizz in my diet. There are occasions when I pay for preferences and convenience. Photo by paalia
Do credit card advantages outweigh the extra expenses?
Credit Card Advantages:
- You don’t have to worry about change. One of the things that drives me crazy about paying with cash is all the change in my pocket. When I go to buy something I find myself digging around for change because I don’t want more, but then I feel like an old lady who is holding up everyone in the store. I often just give a larger bill and fill my pockets with even more annoying change.
- Book keeping is easier. With cash if you lose your receipt, the record of your purchase has gone MIA (unless you have an incredible memory – which I don’t). My wife and I were trying to sort out some of our bills earlier today and I caught myself thinking that if we had just bought it with a credit card we would instantaneously know how much we spent.
- Purchasing items for business. Where I work we use a reimbursement policy. I buy it now and they pay me later. Having a credit card for those types of purchases avoids forwarding any cash. It gives time for a check to be cut before the payment is due.
- Warranties. I’ll be honest here. I have never taken advantage of a credit card warranty. However, if you are going to buy an item, you may as well get some type of coverage since there is no extra expense.
- It can save you money. Some cards provide discounts when used at specified organizations. Carrying a card allows you to take advantage of those offers. You can also save a bunch of money when you rent a car with a credit card. When you don’t need to buy the rental insurance coverage you can save a bunch of money.
- Feel sophisticated. Sometimes it’s just about the feeling. We like to feel good. I have never fully understood pedicures, but women say it just makes them ‘feel good’. We are often willing to pay for a feeling. When I don’t use a credit card I feel like I am missing out on something – bonus points or promotions. That may or may not be true, but sometimes I just feel like I’m missing something by paying cash only.
- Convenience. I love standing at the pump and swiping my card. The gas station is one place where taking a journey indoors is hard for me.
- Rewards. There is no denying that credit cards offer some pretty nice rewards – like this Starwood American Express. Sure, they might only be a small fraction of what you spend, but you feel like you’ve done something smart when you are getting rewards.
- Cash can be lost. What happens when you lose your wallet three times in a few months? Some people have a habit of losing their wallet. Those poor folks ought to have the safety of plastic, not a wad of cash on their person.
- Tipping is simplified. With cash it is hard to leave a % tip. Often I find myself with several big bills and then I need to decide how much change to request. However, with the credit card you can leave an odd tip total and no one will think anything of it.
As I write this post there is a small still voice (perhaps the subconscious roar of Dave Ramsey) saying – THAT IS EXACTLY WHAT THEY WANT YOU TO THINK!
Am I a fool or a man of reason? To charge or not to charge … that is the question. What say you?