4 Good Reasons to Shop with Credit Cards (and 4 Reasons to Shop with Cash)

Here's how to determine which payment method is right for you.
Updated April 9, 2024
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There are usually two types of spenders: those who pay in cash and those who use credit cards. Whichever method you choose, there are benefits and drawbacks to each.

Which method should you use if you’re trying to spend less and boost your savings? Following are the benefits of each payment type to help you decide which one is right for you.

Credit: You earn rewards

Drobot Dean/Adobe student holding credit card

With the right credit card, you earn rewards almost every time you shop.

Some cards offer cash back, others give you points toward travel. Or perhaps you can get statement credits or earn gift cards.

Even though these rewards might not offset the full sting of spending your hard-earned money, they can help.

Just remember that you'll need to pay the balance in full each month in most cases to reap the full value of rewards. If you don’t, you might pay more in interest fees than you earn in rewards.

Credit: Fraud protection

JustLife/Adobe upset woman waiting for a phone call

Unfortunately, fraud is a part of life. You could purchase something from a fraudulent seller, or someone might steal your card and use it for their own nefarious purposes.

Federal law states that if you report the loss of a credit card before someone uses it, you cannot be held liable for any fraudulent charges.

If you report the card's loss after a criminal uses it, you're only responsible for the first $50 in charges, and some lenders will waive even that liability.

This protection can provide extra security and peace of mind as you shop, travel, and enjoy life with your credit card.

Credit: No need to carry cash

olly/Adobe woman buying at a shop

If you’ve ever lost paper money, you probably remember how much it stings. The worst part is that there's no way to get those dollar bills back.

By using credit cards, you can avoid the drama of losing cash. Lose your credit card, and all you have to do is call your lender, cancel the card, and request a new one.

Credit: You can improve your credit score

fizkes/Adobe paying with credit card in smartphone

Your credit score is a large part of your financial well-being. Your score plays a big role in whether you're approved for a loan, and the interest rate you pay on that loan.

Using your credit card responsibly can help boost your credit score. Make sure you make payments on time, every time. And avoid running up high levels of debt. Both of these actions can raise your credit score over time.

Cash: You might spend less

peshkova/Adobe female holding envelope with cash

Research consistently has found that people who purchase things with cash tend to spend less than those who use credit cards.

Here's a simple example of how this might work. Grab an envelope and stuff it with all the money you plan to spend on a given expense over the course of a month. Once that money runs out, you stop spending — period.

So if you allocate $100 for restaurant food, that's all you get until the following month.

It’s a simple strategy that works because it’s cash-based. Once the bills are gone, you can’t spend more.

Cash: Some sellers only accept cash

LIGHTFIELD STUDIOS/Adobe barista taking cash payment on bar

It might seem hard to believe in the digital era, but some businesses still only accept cash.

Other businesses give you a discount for paying with cash. That's because a cash transaction helps the seller avoid having to pay credit card processing fees.

Carrying cash gives you that nice feeling that you're prepared to handle whatever your shopping day might bring.

Cash: No missed payments

BestForYou/Adobe young woman in her room resting on cozy rocking chair

In our busy world, it’s easy to let a credit card payment slip your mind. That's especially true if you have multiple cards.

With cash, it’s simple: Once you spend it, you don’t have to worry about anything else.

Cash: More privacy

tashatuvango/Adobe file folder labeled as privacy

Some people worry that technology is monitoring their every move in the digital era. Maps track where you drive, store apps take note of what you buy, and your bank has a record of what you spend.

Cash can be a good solution for those who prefer more privacy and don’t want a company viewing what they buy. With cash, the transaction doesn't connect to an account that keeps track of spending activity.

Bottom line

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Spending wisely can help you establish a solid financial foundation that might keep you out of money troubles.

Whichever method you choose, try to limit your spending and make sure to stay out of debt

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