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Should You Use Cash or Credit Cards?

Finance gurus, professionals, and hard-working Americans have been debating for years whether to use cash or credit cards. Which is best when it comes to how you spend your money?

  • Is one better than the other?
  • Should you use cash and cut up your credit cards?
  • What’s the big deal with either of them?

Here’s the response to the age-old question, “Should you use cash or credit cards?” 

cash or credit cardShould You Use Cash or Credit Cards?

This post is written by our fabulous staff writer, Kimberly Studdard.

The Big Feud Between Credit Cards and Cash

First, let’s just say that there is a clear winner between using cash or credit cards. However, the “winner” isn’t defined by what the gurus say, or even what the people around you say. What you should use is all based on you, your lifestyle, your goals, and what you’re comfortable with. But let’s take a look at the pros and cons of each.

Credit Card Pros

First, let’s start with credit cards.

Cash Back

I know, I know, cash back, points, and the like may not really add up to much. However, if you’re smart about your spending, know how to “hack” credit cards. Or, if you’re running a business/spending a lot of money in a month, having credit card perks isn’t too bad.

For example, I have a business credit card that I use for supplies, booking travel for conferences, and more. I pay the credit card off every single month with money from my business account, but I do get quite a few perks by using the credit card vs. paying in cash. Believe it or not, I get around 3% back on purchases, and during certain periods, I can rack up mileage points. Because of this, I’ve been able to get some money back, as well as pay for plane tickets with points instead of paying out of pocket.


Credit cards offer more security than cash when it comes to payments. If you’ve ever had someone try to scam you, or ever made a purchase online only to find out it was crap and you needed your money back, it’s much easier to prove (and actually get the money back) if you’ve used a credit card.

Banks are also pretty good about setting up fraud alerts and making it easy to stay up to date with security measures.

Builds Credit

While I don’t believe everything in life revolves around credit (as I believe in buying what you can afford), if you need a good credit score for any reason, one of the easiest ways to do that is by using a credit card. If you can’t get approved for a credit card, you can always sign up for a secured one where you use your own money as collateral.

Related: How to Make a Secured Card Work For You

Ease of Use

Almost every single place I’ve gone has accepted credit cards and has made it easy for you to pay for your items. Also, if you want to shop online, you need to have a card of some type to be able to. With more businesses going the virtual route, cash may soon become obsolete, so in reality, credit cards are a great alternative.

Credit Card Cons

Can Get Out Of Hand

If you aren’t careful with your spending, you could easily find yourself in credit card debt if you decide to use credit cards. If you know that you’re a spender, have a hard time saying no, or don’t watch your accounts frequently, you may want to say no to credit cards.


Thieves have gotten pretty smart. While many of us can smell a fraud a mile away, there are people who are still susceptible to having their money, and even their identity, stolen. If you ever get mail or a call that says you need to pay something or hand over information, just remember to call the actual company (use Google to get a real phone number or address) and verify what they want from you.

Cash Pros

Now that we’ve talked about credit cards and their pros and cons, let’s talk about cash.

Can’t Overspend

Cash is king when it comes to living on a budget! You can’t overspend what you don’t have. So, if you find yourself spending more while using a credit card, try switching to a cash-only budget.

No Debt

Of course, by using cash, it’s practically impossible to get into debt. You don’t have the temptations of overspending, buying what you can’t afford, and more, all because you know exactly what you have in your hand and in your account.

Easier to Manage

Honestly, it’s easier to manage cash on a regular basis. If you use the cash envelopes, for example, you know that you can’t go out to eat anymore once the “eating out” envelope money is gone. No more guessing “How much did I spend?” because you already know.

Cash Cons

Not As Secure

I don’t know about you, but I’ve lost money so many times.

  • I’ve had my wallet stolen.
  • I’ve dropped cash and change when trying to put it away.
  • I even gave a $20 by accident instead of a $10 and didn’t realize it until I needed that $20 bill!

Cash just isn’t as secure as a credit card. With a credit card, you can report it stolen, close down your account, and keep your money safe. With cash, you just have to hope that you don’t lose it.


If you’ve ever been mugged, or live in a city where muggings happen often, you may know that you’re supposed to give the assailant what they ask for. That’s easier to do when you know you can just cancel cards, but cash can pose a serious risk to you.

I’ve known people who carry all of their cash envelopes with them, and that could easily be up to $5,000 at a time on one person. If you do plan on using cash, I’d recommend only keeping about $100 on you (max) at a time.

Not As Easily Accepted

I never thought I’d see the day when businesses no longer accept cash, or at the very least, larger bills. I went to a gas station the other day and only had cash on me, but the clerk wouldn’t accept it because the station didn’t accept bills higher than $10. Imagine that!

Of course, for smaller businesses, I understand them wanting to get away from a cash system. It’s safer for employees, helps cut down on fraudulent bills, and it’s easier to see cash flow when everything’s automated. However, if you plan on using cash as a consumer, remember to keep more smaller bills vs. larger ones.

Should You Use Cash or Credit Cards?

So, should you use cash or credit cards? I say use whatever you’re comfortable with and what works for your lifestyle. For me, I prefer to use my debit or credit cards, but I’m also smart with my finances.

If you don’t trust banks or online venues, maybe cash is the better choice. If you find yourself overspending, cash would be smart as well. Or, if you love automation and know not to overspend, maybe credit cards are your best bet. No matter what you decide, neither answer is the absolute wrong one.

So what about you? Do you prefer cash or credit cards??

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AUTHOR Kimberly Studdard

Kim Studdard is a project manager for online entrepreneurs and small businesses. When she isn't spending time with her daughter and husband, or reading her growing pile of horror books, you'll find her working on her HR degree and working towards FIRE.

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