Think about being able to walk around with a fat wad of bills in your pocket and drop greenbacks for everything you buy. It’d be pretty nice huh?
But back to reality, why would you want to use cash in the first place? There are some clear benefits to using cash, but if you’re a financial superhero you should have the wherewithal to take advantage of credit cards.
So why use cash??
Using cash is a great way to curb spending. A Dun and Bradstreet study found that people generally spend 12-18% more when they pay with a credit card. There’s something about human psychology that makes it far too easy to swipe a card and voila! You bought something. For some reason, people are far more reluctant to shell out a few Benjamin’s when they have to pull it out of their wallet to pay.
Plus, if you can’t manage a credit card balance then cash is the way to go. With APRs as high as 20% no one can afford to pay that kind of interest. If you aren’t diligent enough to pay off your credit card balance then USE CASH!
So why use a credit card??
Let’s face it, credit cards are convenient. You practically need them today to pay for anything online, book flights or use Amazon.
Not to mention, credit cards give you a paper trail of your transactions without keeping physical receipts. I use our credit card statements to feed into our budgets each month. It’s an easy way to see where all of our money is going.
The single biggest benefit of using credit cards… BENEFITS! From airline miles to cash back, there are tons of offers out there from credit card companies.
My wife and I choose to limit ourselves to two credit cards for simplicity sake. We used to rack up Alaska Airlines miles until I determined that the Fidelity Amex would be more beneficial.
Basically we get 2% cash back on ANY purchase deposited straight into our Fidelity account. Right now we have it feeding directly into my son’s college 529 plan. It’s unbelievable how quickly it adds up when 2% of everything you buy goes into the account automatically (and we try to put every purchase we can on it). Plus, those contributions grow since they’re auto invested into a long-term target date fund.
In the end, everyone needs to have a financial plan. Maybe credit cards don’t work for your particular situation. But if you have the discipline to use them wisely and pay off the balance every month, then why not take advantage of a free flight or cash back?!
photo cred: Tax Credits