Should You Shop With Cash or Credit?

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Although many studies have shown that you may spend 12-18% more when using credit cards instead of cash for purchases, the four of us still pondered which is the best method to use for your everyday spending: cash or credit?

In the end, we decided it’s a personal decision and can depend on several factors, some of which are listed below for your consideration in case you haven’t yet made up your mind about which is the best payment method for you.

Should you shop with cash or credit? Does which one you use make a difference in your spending habits? You bet! Here's how we use each.

Pros of Using Cash

“I like to use cash for some of the problem areas in my budget, like eating out. This gives me a natural limit to how much I can spend, especially if I don’t carry a debit or credit card in my wallet with me. I have to stick to only whatever amount of cash I have on me.”

-Kayla

“I don’t really like to use cash, but having some on me recently saved my butt. I was running late to get on a train, and unfortunately, you can’t buy tickets ahead of time. My only choice was to run on board and pay the higher price – the catch was, only cash is accepted. Thankfully I had enough, otherwise I would have been left waiting another hour for the next train! Cash can definitely come in handy during situations like that.”

– Erin

“I typically like to use my debit card for most purchases, since it’s easier for me to track my balances, but I do like using cash to buy gasoline for the vehicles because most of our gas stations offer a five cents per gallon incentive to pay with cash instead of a credit card. If paying with cash will help me save even more money, then I’ll definitely take advantage of those offers.”

-Kristi

“Like Erin, I don’t like to use cash a lot, but I do like that it can be very limiting. If I bring cash somewhere I know that I can’t overspend because once the money runs out it’s gone. I can’t borrow against what I have and that’s a really great benefit for someone who is avoiding debt and trying to mind their budget.”

-Chonce

Cons of Using Cash

“The reason why I don’t like using cash is because it’s harder to track, at least for me. I enjoy automating my money management with Mint, and you have to manually enter cash transactions. I usually forget to do that, and before I know it, I’m left wondering where it all went. I only use cash if I’m going out with friends and there’s a possibility of having to split something, and cash makes it easier.”

– Erin

“One of the cons of using cash is that it may not be as convenient. For example, I have cash categories for several parts of my budget and I often do multiple transactions on my trips to Walmart so I can keep track of how much I spent in those different categories. This takes a little extra time and I try not to go to the store during a peak time when they are busy so I don’t annoy the cashiers or other customers.”

-Kayla

“My big issue with using cash it that it’s harder to track where your money goes. If you ever need to back track your steps or prove you made a purchase, you have to have a receipt and that’s not always convenient for people to hold on to.”

-Chonce

“Cash tends to burn a hole in my pocket. For whatever reason, I’m far less likely to spend my money if it’s in my account instead of in my wallet. When I do have cash on hand, I have to be really vigilant about not overspending on frivolous and unnecessary items.”

-Kristi

Pros of Using Credit

“My go to credit card does offer categorized spending reports on my monthly statements, which helps with tracking your spending, however they can only whittle it down so much. They can’t capture the difference between buying groceries at Walmart or buying home products at Walmart, so the information may not be as accurate as you need it to be.”

-Kayla

“I don’t actually use credit right now, because we are still working on digging ourselves out of debt and improving our credit score, but I do use my debit card for most purchases. I love that I have the ability to check my balances, keep tabs on my accounts, and know with just the push of a button how I’m fairing financially. I elected to have receipts emailed directly to my inbox, so I can always keep track of my budget.”

-Kristi

“I love using my credit cards because they’re much easier to track! All I have to do is login, and boom, there’s my spending history. Again, automating my tracking is just easier when I use credit or debit because the transactions get pulled and I don’t have to worry about entering anything. I also love getting cash back rewards as I pay off my balance in full each month. Why not earn some extra money while I’m doing my usual spending?”

– Erin

“Even though I don’t use credit cards much, I like the rewards they offer and how I’m able to earn cash back or points that can go toward travel for simply spending money on things I would have purchased anyway. I also like how much my credit score has increased after using credit cards wisely and paying the bill off in full each month.:

-Chonce

Cons of Using Credit

“I do find that I feel less of an impact when I shop with credit. I know credit isn’t “free money” but sometimes I lose track of how much I’ve spent when I use credit instead of cash.”

-Kayla

“Credit cards can tempt you to overspend which can lead to debt and having to pay interest making your purchases even more expensive than they should be. If you have problems with shopping, I’d say the bonus rewards that credit cards offer can actually hurt your finances if you start to feel pressured to spend money on things you don’t really need.”

-Chonce

“The most obvious con that comes to mind is that credit cards are easier to hack. You have to stay on top of your transactions and make sure you’re opted into alerts just in case anyone ever gets a hold of your information. Thankfully, most companies are great about sending alerts the second suspicious activity is detected. I’ve never had my information stolen, but I know others who have, and it can be a hassle to deal with.”

– Erin

“With credit cards, it can be too easy to forget that you’re paying the bank in interest for everyday purchases. If you’re not mindful of your spending, you can reach the point where you realize you’re spending hundreds of dollars on interest payments for things like gas, groceries, and clothing that were purchased and used months, if not years, ago.”

-KristiĀ 

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