Six Things You Need to Know About Using a Credit Card VS Cash

Give me your credit card, mom!

As is the norm with busy families and as a working mom, I barely get to spend one on one time with my children. On a rare day off in the middle of the week, after dropping my oldest off at soccer practice, I went grocery shopping with my four year old son.

I put him in the grocery cart, and started pushing the cart, glancing at my grocery list as we walked. His little hand reached out to my bag, and he asked:

“Hey mom, I need some coins”, he asked.

“I don’t have any coins, see I don’t carry much cash in my purse,” I replied and showed him my purse.

“Oh yes, you pay money with that card! Now give me the card so I can buy something,” “Not so fast, buddy, you got to wait till you earn your own credit card,”I said, laughing.

Children are pretty observant. He is absolutely correct in his assessment, as I do use my credit card for 99% of my purchases. This is a huge change for me. Growing up in Asia, credit cards are not readily accepted. I would probably use my credit card several times a year, once my parents co-signed for one when I turned 18.

Building your credit score.

Remember how we didn’t qualify for a credit card when we first moved to America as adults? This is a good lesson to learn from, as many young adults in America have the same problem with lack of credit when they leave home. Consider getting your children a supplementary credit card (that you do not need to allow them direct access to), once they turn 12. This will help build their credit history.

While several studies show that people spend less money when using cash vs credit card, I find that there are many reasons I much prefer using a credit card. For one, I don’t have to deal with bulky and heavy loose change. In addition, most credit card comes with purchase protection. Here are the many reasons why I use my credit card for my daily purchases, wherever it is accepted. As long as they don’t charge me more for using a credit card.

Credit Card for the Win.

  1. Less concerned about theft. With the new credit card chip technology, I worry less about losing my credit card. In addition, most credit card offers protection in such instances, so you are not liable for a purchase you didn’t make. Cash is gone once it is stolen.
  2. Easy to track purchases. I tried keeping store receipts individually, but I could never find a good system. It ends up cluttering my purse or counter tops, and be thrown out the every time we clean the house. Many stores are able to track purchases that are made with a credit card. For example, if I need to make a return at Target, purchases made with the credit card can be tracked for 90 days (which is the returns time frame).
  3. Cashback rewards. My current Citi Double Cash gives me a flat rate of 2% credit on all my purchases. 1% rebate at time of purchase and an additional 1% when I make my payment. Since I pay my credit card bill in full at the end of each month, it is an automatic discount for me. My husband uses a Chase reward card that rotates 5% cashback every three months. Problem with that is I never remember what the current promotion is on!
  4. Built in travel protection. One of my prior Chase cards (which I did not renew due to its annual cost), had build in primary car rental insurance protection. Most credit cards offer a secondary benefit, which means the rental company will come after your current auto insurance first and the credit card company will pick-up the tab after. This can cause a jump in your insurance rates if a claim is filed.
  5. Since we bought our vehicles by paying cash and paid off our home loan early/paid cash for second home, we have no other way to build our credit. Using a credit card and paying off the balance by the end of the month helps us maintain our high credit score. While we care less about this given our lack of need for loans, it is still important to keep our credit score high. This helps ensure we get a good insurance rate quote and other day-to-day transactions that require a good credit score.
  6. Convenience. With my busy life, it is more convenient for me not to deal with cash. With the advent of mobile banking, I could get my checks into my bank account using my phone. My pay check goes automatically into my bank account. It has gotten to the point that I step foot in my bank once a year or less. By using my credit card, even for larger purchases, I do not have to go to the bank to withdrawal cash.

For me, credit card is the way to go. What do you prefer? Comment below.

 

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