Cash vs Card: Which to Use and When?

Cha-ching! Whether you’re old school and like to pay with cash, or you prefer the convenience of a simple credit card swipe, you may be wondering which is really the better method. And the answer is, (drumroll please…) it depends. 

The cash vs card debate is as old as the credit card itself. While credit cards are more the norm these days thanks to their convenience, reward programs, and security, cash is often a better way to stay on budget, doesn’t come with fees, and is widely accepted almost everywhere. 

The cash vs credit cards pros and cons list is long, but don’t worry. We’ll break it down to help you determine which is the best to use and when. 

Pros and Cons of Credit Cards

Credit Card Pros

Grace Period: One of the biggest advantages of using a credit card is the grace period, which allows you to make purchases and not accrue interest if you pay off your balance in full by the due date. This can be helpful if you need to make a large purchase but don't have the cash on hand, as you can pay it off over time without accruing interest. 

Build Credit: Using a credit card responsibly can help you build credit, which is important if you want to apply for loans or other forms of credit in the future. By making on-time payments and keeping your balance low, you can show lenders that you are a responsible borrower and improve your credit score, which makes it easier to be approved in the future and qualify for lower interest rates. 

Convenience: Using a credit card is undeniably more convenient than cash, especially for larger purchases or online transactions – which you physically can’t use cash for. It also means you don’t have to worry about counting cash in the grocery line, or walking around with loose change in your pocket, which most of us can agree is pretty annoying. 

Rewards: Many credit cards offer rewards to users – like travel miles or discounts – or cashback on purchases, which can add up over time. This means that you're getting additional savings or benefits for using your card that you wouldn’t get otherwise, which is one of the biggest perks of a credit card for most people. 

Security: Paying with a card is more secure than cash because they can be canceled and protected against fraudulent activity. If your credit card is stolen, you can contact your lender to have the card canceled and any fraudulent charges removed. If your cash is stolen, well, too bad. 

Record Keeping: The beauty of paying with a credit card is that you can go back and review your purchases later to keep track of your spending. You can easily view your transactions online or on your monthly statement, which can help you identify areas where you might be overspending.

Cons of Using a Credit Card

Fees: Card transactions often come with fees like interest charges for carrying a balance, foreign transaction fees for using the card abroad, and even sometimes annual fees just because. These fees can add up and make using cards much more expensive to use a credit card vs cash over time. 

Debt: The fees you accrue by not paying your balance off in full each month are more than just an inconvenience – they can lead to crippling debt if you’re not careful. Interest charges and fees can quickly snowball on you, and the longer you wait to pay off your balance, the further in debt you’ll become. This doesn’t have to become a problem if you’re disciplined, but it’s riskier than cash in that way. 

Fraud: Even though credit card companies are good about having your back in the event your information is stolen, cards are a lot more vulnerable to fraud than cash in the first place. And if your information is stolen, it can be difficult and time-consuming to rectify the situation. 

Not Accepted Everywhere: While most cards are widely accepted these days, there are still some places that don't take them, such as some small businesses, stores in rural areas, or when you’re making a really small purchase. So, while you’re probably safe, it’s a good idea to at least have some cash on hand in the event you run into a situation like this. 

Pros and Cons of Using Cash

Pros of Paying With Cash

Easy to Stay on Budget: Using cash is a tried and true method for ensuring you don’t go over-budget. When you use cash, you are only able to spend what you physically have, which can help you keep better control over your spending. This is particularly useful if you're living month to month or trying to save money.

No Fees: One of the main advantages of paying with cash is that you never have to worry about paying transaction fees. Pretty much anywhere you go, when you pay with cash, there are no additional charges beyond the cost of the item you are purchasing (besides taxes, but that’s another story). 

Privacy: If you want to keep your purchases private, dealing in cash is the way to go. Cash transactions don't leave a paper trail like card transactions do, which can help maintain your privacy. This is particularly useful if you're concerned about identity theft, you don't want to be tracked by companies, or you don’t want your significant other to see how much you spent on that new fishing pole. 

Immediate Payment: Cash payments are immediate, so you don’t have to worry about future credit cards bills or accruing interest. So instead of having to pay your credit card bill on payday, you can rest easy knowing you don’t owe any money. Cash also can save you in the long run, particularly if you're someone who tends to carry a balance on your credit where the interest adds up. 

Widely Accepted: Cash is accepted almost everywhere, even for small purchases or at local stores that may not accept cards. If you carry cash, you'll never be in a situation where you can't pay for something (unless you don’t have enough money, of course).

Disadvantages of Cash

When It’s Lost, It’s Lost: Carrying large amounts of cash can be risky, simply because if it is somehow lost or stolen, there’s really no way to track it or get it back. Unfortunately, a thief is also more likely to try to rob you for cash than for a credit card for the same reason. 

Inconvenience: Cash can be inconvenient, especially when you need to make large purchases. Carrying around a thick wad of cash can be heavy and cumbersome, and it can be difficult to make exact change for some transactions. It may also earn you a few impatient glances at the supermarket as you dig for that quarter you’re sure you have somewhere.

No Rewards: When you use cash, you won't earn any rewards or cashback for your purchases like you do with a credit card. That means that you're missing out on all those potential savings and travel miles you could be earning. 

Record Keeping: Cash transactions do not provide a record of purchases, which can make it difficult to keep track of expenses and budgeting. While that may be a pro in some situations, it can be problematic if you need to track your spending for tax purposes or to monitor your finances.

Summary

When trying to decide between cash vs card, there are plenty of pros and cons for each that can help you determine which is best for your given situation. 

Generally speaking, credit cards offer more security, a chance to grow your credit, typically allow you to earn rewards, and are far more convenient. They also charge fees and interest, which can put you into debt over time. 

Cash makes it easy to stay on budget, is accepted everywhere, offers more privacy, and isn’t subject to fees. However, there is no security if your cash is lost or stolen, it makes it harder to keep track of your spending, and it’s less convenient to use. 

Luckily, our wallets here at GeoGrit can accommodate both cash and cards, so you always have what you need. These slim wallets can hold up to 12 cards and offer a choice between a cash strap or money clip, so you can customize it to fit your needs.