Credit Card Advantages Over Cash

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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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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?


  1. jarthurford says

    1. The change problem is easily solved by putting it into a can or jar for charity or special events. It’s amazing, especially here in Canada how quickly the change adds up.
    2. My rule on Credit cards is to have only one, and to pay it off fully each month. However at the moment I have two because the American Express reward card we use as our main one is not accepted as widely as others. Multiple cards lead to greater risk of debt.

    • Craig says

      @jarthurford. First, hey dad how are you? I guess the family is really giving their input today (see Mrs. Ford comment). For those of you who don’t know below $5 in Canada there is only change. I bet tons of charities would be helped if people adopted that rule. A great idea to increase your giving.

    • Craig says

      @Jason and Joe. Thanks guys for leaving comments. I have been a credit card user (with the exception of the last three years) for probably shy of 15 years. I have never paid any finance or late fees so I guess I figure if I’m going to slide plastic I may as well get points. Again, the feeling of being sophisticated. Not saying I’m right, just that is my feeling.

  2. says

    Craig, you raise an interesting discussion. Common PF blogger or counselor opinion is to pay for cash or debit card and not use credit. My wife and I are not cash people. Call us crazy, but we’ll pay for a Coke with a debit card. The reason? I as the family CFO can keep better records. I personally can’t say I’m not against credit cards, but am against the misuse of them. If people don’t fall into the temptation of spending more than they can pay off each month then it’s probably okay. The problem is the temptation that we all sometimes fall into. Seen this happen alot. I think Joe raises a good point. Maybe the debit card will provide enough convenience, especially for tracking purposes. Great post!
    .-= Jason @ One Money Design´s last blog ..Save Money by Playing The Grocery Game =-.

  3. Mrs. Ford says

    That still, small voice may just be your wife’s. I’m with jarthurford – if you do choose to have credit cards, one is more than enough. If you have more than that, it’s likely that you’ll forget a payment. The rewards are not always worth the hassle or the price you pay in interest if you forget a payment. Even those of us who are very responsible can benefit from simplifying things by not having too many cards.

    • Craig says

      Hey all. FYI “Mrs. Ford” is my wife. She has secretly been anticipating the day this article would post because she had a comment she wanted to leave. As you can tell my wife is the down-with-credit-cards member of our marriage union. I tried to convince her to do a “he said” – “she said” post, but my pleading was to no avail. What do you think, should Mrs. Ford get a little print time on Money Help For Christians?

  4. jarthurford says

    I do one other thing with credit cards that I know some will disagree with, but we set up a pre-authorized plan in which our credit card company takes the balance owing from our bank account on the day it’s due. No late payment fees, and a good way to restrain yourself from over spending what you have in your account.

  5. says

    I agree with you regarding a credit card’s usefulness when having to front business expenses that are remibursement, but think a couple of the reasons to use credit cards are iffy.

    I use envelopes and at the end of the day, put any change I got back in a jar. When that jar’s full (and it’s a big jar), I take it to a coinstar machine and the result becomes a snowflake towards my debt snowball and once that’s gone it goes towards whatever savings goal I’m working on.
    .-= Bucksome´s last blog ..Dave Ramsey Sale =-.

    • Craig says

      @Bucksome. Thanks for you comment. The business expenses are very important in my case. While I don’t charge a lot of things, when I do the amounts are large so the credit card is helpful. Great idea with the change jar!

  6. Kerri says

    The main reason my husband and I use credit cards is convenience. The second and third are convenience and convenience. We also are able to track mostly every dollar we spend through categorization. We pay the credit card in full every month (no balances), so essentially it buffers the purchase with the payment, and you can keep that money for 30 days and have it grow interest. Our rewards points just paid for over $600 in airline fees for a recent trip: this was from payments to the grocery store, gas, hotel stays, restaurant bills, etc. that built up over time.
    The card does not entice me to spend frivolously. I am well aware it is tied to “real money,” it’s just more on my terms. I appreciating seeing a detailed list of all of our expenses each month–seamlessly. Cash disappears; credit provides an instantaneous digital record for any purpose.
    Thanks for this post!

  7. Ace says

    Credit cards are great! if you pay them off each month and are financially responsible. You get the rewards that are offered.

    Debit cards are great too!! I feel they are perfect for those that who do not care about rewards and lack the will power to pay off the balance.

    Both cards have a credit limit. Credit cards have a set limit and debit cards have a limit to what is in your account. So you might have to wait till payday to buy something you could afford.

    For me…. I love my credit card!!! I use it to get what I need and have a budget so I know what I can afford. The company takes my payment in full out of my bank account automatically each month. So it is like a debit card in the end but with rewards.

    • says

      Agreed. If you are responsible then credit cards are a helpful tool. Unfortunately, there are a lot of people who think they are responsible (I only have $5,000 in credit card debt).
      I’m also a credit card user.

  8. Wes Smith says

    I don’t know how old this article is (I followed a link from another article). I do know that credit cards are more costly for the business receiving the payment. If everyone used cash, the merchants could lower prices. The more cash we use, the lower prices will be. I do sometimes use credit cards (especially for travel and internet purchases) but anytime I am purchasing from a local small business, I use cash or check. My plumber is a hard working guy who shows up any hour of the day he is needed, why should he have to give up a percentage of his fee to Mastercard or Visa? I pay him with a check so all the money goes to him.

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