Most of the credit card articles on this site have to do with the points and miles you can accumulate by signing up for various cards and spending on daily purchases. But one of the first things I recommend to someone struggling with their spending is to get rid of their cards and start paying solely with cash. It’s no secret that it’s easier to spend more money with credit cards versus cash and there are tons of studies(here’s one) that prove that fact if you don’t want to take my word for it.
But once you’ve got a grip of your finances you will probably notice that paying with credit has a lot of benefits. We all know about the cash back rewards you can get but there are also things like sign up bonuses, fraud protection and just plain convenience. Even though I’m always telling my friends to sign up for Ally Bank for their free ATM withdrawals, most of them still use big banks like Chase or Citi and we have to plan our trips around finding a Chase ATM. That’s just an added layer of inconvenience to paying with cash.
I’ve got 25 credit cards right now but I’ve got them all set up on Autopay and I check all my daily transactions at once using Mint every morning. The whole process takes about 2-5 minutes depending on how many purchases I’ve been making and then I’m done. I like this system because the one thing I value the most in my life is my time. No matter how much money you’ve got you’re never going to have more time than someone else(we don’t live in a Justin Timberlake movie). So I try to live my life as efficiently as possible and credit does wonders to simplify my life.
Credit Cards are Convenient
Right now, I’m putting most of my purchases on my Barclay Arrival card since it’s giving me 2.2% cash back on all purchases. But the rewards probably pale in comparison to how much more I’m spendingthan if I were to be paying with all cash. Just think about the last time you were out with your friends and you paid for that extra round of drinks. When you pay with your credit card, it just doesn’t feel like real money since all you’re doing is signing a piece of paper. You don’t see the actual transaction debit your account unless you use a service like Moven which alerts you of your spending in real time.
I live in Southern California and nearly every single business I frequent accepts credit cards. Even food trucks are taking credit cards now that inventions like Square have popped up enabling merchants to pay a small percentage of every credit card transaction. Right now, my wallet consists of two credit cards, one ATM card, my drivers license and a few business cards, that’s it. It’s actually more of a bill holder and you can barely see it through my slim fit pants! If I were to lose any of those credit cards, it wouldn’t be a big deal at all since I could just get them replaced and ask for free expedited shipping. I’d only have to go a day or two without those credit cards.
Even though I would never make a $20,000 purchase, the two credit cards in my wallet carry a combined credit limit of 20k. That’s like walking around with $20,000 in your pocket but there is absolutely no risk. If my cards get stolen, I would simply give my bank a call and let them know when it was stolen and I would not be responsible for any fraudulent charges. If your card is stolen, Federal Law limits the liability of cardholders to $50 no matter what amount the unauthorized user charges. And since the credit card business is so competitive, every one of the major companies tend to waive this fee. That’s why you never have to pay any amount for unauthorized charges when your card is stolen.
Tracking Your Finances
Since I’m big on technology, I like having all the information about my spending patterns and habits at my fingertips. It’s pretty easy to analyze my budget since I pay for everything with my credit cards. I don’t need to enter all my cash expenditures into a spreadsheet one by one since I have computers that can do all that for me. There are times when I need to look up certain transactions and credit cards make that really easy. When it comes to tracking your finances, credit cards are vastly superior to paying with cash.
Readers, what do you think about paying with cash versus credit? Do you think the convenience and benefits of credit cards justify the extra spending?
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We’ve recently started making all of our regular purchases on our Barclaycard. We are pretty responsible with it and pay it off every month, so we decided that there’s no reason not to earn rewards on our regular spending!
That’s why I use cc’s 🙂
I prefer cash because I know I paid for it and don’t owe any money. However, there are some pretty amazing credit card cash back deals available so I’m considering a credit card in the future.
I track my accounts in Mint so it subtracts my cc balances from my net worth. Since everything is automated it’s all a matter of how you look at it.
I like credit cards for the same reasons. Some say it’s harder to spend cash, but I find it’s easier and I have no idea what I spent it on unless I jot a note in my phone.
I’m also using the BC Arrival on nearly everything outside of gas and Costco now for the same reason. However, once the annual fee comes up, I will downgrade. At that point, I’ll probably pare it down to my Costco AMEX and 2 strong no annual fee cards: the Fidelity AMEX 2% everywhere and the Capital One Quicksilver 1.5% everywhere.
I think that’s the biggest thing for me, it’s so easy to track your spending with credit cards vs if I were to pay in cash.
I like the Arrival too and I use it whenever I’m not trying to hit spend req’s on other newer cards. I honestly don’t worry about cash back too much b/c I can sign up for 1-2 new cards every year and that will will eclipse 1-2% CB from my normal spending. Although I do sign up for many more cards than that every year 🙂
I use cash every time I purchase. I’m not a big fan of credit card, but after reading all your posts about credit card churning and reviews, I think I would try to get my first credit card.
Yea might as well take advantage of free money if they’re going to give it to you 🙂
I’m a credit card kind of gal- but I have tons of friends who prefer cash because it helps them to better budget. A happy medium for someone who doesn’t like the idea of credit cards are pre paid debit cards. Some offer points/rewards like a credit card and they allow you fill your card with your monthly budget (when it’s gone it’s gone)
Yea I’m all about simplicity and it seems like cash budgeting would be a lot of work. Right now, I’ve got all my credit cards linked in Mint, all are on autopay and I spend 1-2 mins a day checking transactions on my phone (with Mint).
We treat our credit cards as if they were debit cards. We do not charge what we don’t already have in the bank account. And we don’t buy more stuff than we can use. We do use our 2% cash back credit card for as many purchases as we can, though.
I use credit cards for everything. Money just disappears when I use cash and it’s so hard to track. Between using Mint (just to make it easier to log into accounts, not for budgeting) and having all of my credit cards on automatic payment from my checking account, it’s pretty easy. I don’t even have to worry about which credit card I used. Right now, I’m using the Barclaycard for everything except restaurants. (5% with Chase Freedom!) I’m pretty excited for my new chip Barclaycard that is coming soon!
I switched back to using the Barclaycard because they improved their ‘travel’ categorization, which makes it much easier to redeem their points. And I realized that there will definitely be more travel purchases this year that I can then redeem against.
Yea I don’t really use Mint for budgeting either, I mainly use it to double check all my transactions and see what my net worth is like. I just got my new chip card in the mail, can’t wait to use it this summer on the honeymoon.
I use Barclay for regular purchases too (when I’m not trying to hit spend req’s which is most of the time) since I know I’ll eventually buy a hotel room or something like that and be able to redeem the points. You just have to be a bit more patient 🙂