It’s a question that consumers have faced for decades: Is it better to use a credit card or pay with cash?
Even with cash back credit cards, the decision of what to use really boils down to your personal financial situation, spending habits, and how likely you are to pay off your credit bill on time.
Here are some basic guidelines on how to decide which method of payment is best to use.
If you’re over 50, take advantage of massive discounts and financial resources
Over 50? Join AARP today — because if you’re not a member you could be missing out on huge perks. When you start your membership today, you can get discounts on things like travel, meal deliveries, eyeglasses, prescriptions that aren’t covered by insurance and more.
How to become a member today:
- Go here, select your free gift, and click “Join Today”
- Create your account (important!) by answering a few simple questions
- Start enjoying your discounts and perks!
Important: Start your membership by creating an account here and filling in all of the information (Do not skip this step!) Doing so will allow you to take up 25% off your AARP membership, making it just $12 per year with auto-renewal.
Use rewards credit cards for big purchases you can pay off right away
This is one case where your ability to pay off your credit purchases on time will come in handy. If you’re buying an expensive appliance or electronic product, it probably makes the most sense to use a rewards credit card and then pay it off right away.
Certain credit cards also offer extended warranties and price protection on big-ticket items if the price drops drastically within a certain window.
Use cash if you’re on a strict budget
If you’re on a strict budget, using cash can help you avoid going over your target number. It’s usually easier to spend less when you have physical money and can see it literally running out.
Use credit cards when traveling
Using credit cards when traveling makes sense for a lot of people. They’re convenient, can earn travel rewards, often waive currency exchange fees, and your credit card company can help you prevent fraud if you lose your card or avoid fees if you have to reschedule a flight.
Resolve $10,000 or more of your debt
Credit card debt is suffocating. It constantly weighs on your mind and controls every choice you make. You can end up emotionally and even physically drained from it. And even though you make regular payments, it feels like you can never make any progress because of the interest.
National Debt Relief could help you resolve your credit card debt with an affordable plan that works for you. Just tell them your situation, then find out your debt relief options.1
How to get National Debt Relief to help you resolve your debt: Sign up for a free debt assessment here. (Do not skip this step!) By signing up for a free assessment, National Debt Relief can assist you in settling your debt, but only if you schedule the assessment.
Use credit cards when filling up
Most people would agree that it’s more convenient to use a credit card at the pump to get gas. In addition, you might have a card that gives you rewards at gas stations like giving you a discount each time you fill up.
You just need to make sure you’re able to pay off your balance each month and not accrue interest.
Use credit cards to buy groceries
Similar to buying gas, you can often enjoy extra rewards when you buy groceries on certain credit cards. Again, this only makes financial sense if you’re able to pay off the balance in full each month.
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Use cash for tips
If you talk to a server, you’ll probably hear that they prefer to receive tips in cash, as it’s often the only way to ensure they receive 100% of what you’re tipping.
Use cash for purchases at small businesses
Your local mom-and-pop shop may thank you for using cash. It can help them avoid extra fees on their end associated with customers using credit cards.
Additionally, you can use cash to tip at small businesses and make it less of a hassle for the employee to get that money at the end of their shift.
Use cash for tax bills
When paying your tax bills, it might be better to use cash or check. Many times you may be charged a fee if you use a credit card to pay tax bills.
If you’re not able to pay off your tax bill immediately and you put it on your card, it could hurt you financially with interest for some time until you’re able to pay it off.
Earn cash back on everyday purchases with this rare account
Want to earn cash back on your everyday purchases without using a credit card? With the Discover®️ Cashback Debit Checking account (member FDIC), you can earn 1% cash back on up to $3,000 in debit card purchases each month!2
With no credit check to apply and no monthly fees to worry about, you can earn nearly passive income on purchases you’re making anyway — up to an extra $360 a year!
This rare checking account has other great perks too, like access to your paycheck up to 2 days early with Early Pay, no minimum deposit or monthly balance requirements, over 60K fee-free ATMs, and the ability to add cash to your account at Walmart stores nationwide.
Don’t leave money on the table — it only takes minutes to apply and it won’t impact your credit score.
Use cash for college tuition
We’ve all heard the horror stories of students leaving college with lots of debt. Sometimes this is a result of paying for tuition with a credit card and not being able to pay that off for quite some time. That means paying lots of interest.
Many schools also impose a fee for using a credit card for tuition. So, it’s best to pay with cash (debit card) or check.
Bottom Line
Deciding when to pay with a credit card or cash really depends on each person’s financial situation and habits. While some cards let you earn rewards on everyday purchases, cash can be better if you’re on a strict budget or cannot pay off the balance each month.
Lucrative, Flat-Rate Cash Rewards
FinanceBuzz writers and editors score cards based on a number of objective features as well as our expert editorial assessment. Our partners do not influence how we rate products.
Wells Fargo Active Cash® Card
Current Offer
$200 cash rewards bonus after spending $500 in purchases in the first 3 months
Annual Fee
$0
Rewards Rate
Earn unlimited 2% cash rewards on purchases
Benefits
- Low spend threshold for its welcome offer — $200 cash rewards bonus after spending $500 in purchases in the first 3 months
- Cell phone protection benefit (subject to a $25 deductible)
- Can redeem rewards at an ATM for literal cash
Drawbacks
- Foreign transaction fee of 3%
- No bonus categories
- Select “Apply Now” to take advantage of this specific offer and learn more about product features, terms and conditions.
- Earn a $200 cash rewards bonus after spending $500 in purchases in the first 3 months.
- Earn unlimited 2% cash rewards on purchases.
- 0% intro APR for 12 months from account opening on purchases and qualifying balance transfers. 19.49%, 24.49%, or 29.49% Variable APR thereafter; balance transfers made within 120 days qualify for the intro rate and fee of 3% then a BT fee of up to 5%, min: $5.
- $0 annual fee.
- No categories to track or remember and cash rewards don’t expire as long as your account remains open.
- Find tickets to top sports and entertainment events, book travel, make dinner reservations and more with your complimentary 24/7 Visa Signature® Concierge.
- Up to $600 of cell phone protection against damage or theft. Subject to a $25 deductible.
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