Why use Cash Instead of Credit Cards

Let me say it straight: credit cards are bad. This piece of plastic has become the scourge of millions worldwide as it has strapped them to debt not only for years but for decades. Unfortunately, there are people who have declared bankruptcy because they are unable to pay their growing credit card debts.

You might argue that credit cards give you the ability to purchase things on credit. That is correct but this comfort is exactly the same reason why more and more people are having trouble balancing their finances. Since they can easily buy things in credit, they can just walk away with the things that they want without even thinking of the financial consequences. Before they know it, they are already thousands of dollars in debt and don’t have, in anyway, the means of paying it off in time.

Another reason why credit cards are a definite disadvantage to your finances is that you are not actually paying the actual price of anything you pay with the credit card. Remember that each credit card has interest rates and they are executed as soon as you use your credit card on them. Credit card rates start out really cute – they offer you a maximum of 3.00% interest rate as a start but after 6-12 months, the rates could balloon up to 18%.

That rate is applied once you use your credit card on a transaction. It means that even when you pay your credit card bills on time, you still have to pay for the interest rate since you have used your credit card. Imagine the penalties you have to pay if you don’t pay them on time and most families today, because of the financial crises, have been pretty bad in paying their credit cards on time.

You may say that credit cards offer rewards such as cash rebates. But if you’re willing to spend more than $80,000 just to get $4,000 in cash rebates, be my guest. That $80,000 credit card bill doesn’t even include the interest rates you should be paying.

Cash on the other hand has become “not so cool” nowadays. Bringing cash is a little bit awkward in restaurants and even in malls as you have to bring loads of them if you wanted to go on a shopping spree. But if you really wanted to get out of your financial slump, cash should be your sole payment method from now on. Unfortunately, some high-end facilities don’t accept cash but that should be working at your own advantage since you won’t be able to buy or go to places that are really expensive with cash.

In your cash transactions you never have to think of interest rates. You are buying the product up front and you are paying the actual value of the product. Some will offer their products at a lower price for a credit card transaction. That will work if you have a brand new credit card which could be at the introductory rate. But regular credit cards could get you paying for more – all because you don’t want to carry cash.

Psychologically, cash will also help you out in thinking twice on spending money. Credit cards will never show that your resources are draining. Cash on the other hand will literally vanish if you don’t control your spending. If you carry cash, you will be forced to budget your money and buy only the things that you need. Your credit card will not tell you that you have just spend $1,000 but when you spend cash, you end up with nothing if spend them all at one time.