Cash_or_Credit

Will that be cash or credit for your purchase today' Every day we are asked this when checking out our groceries, getting our favorite fast food to purchasing that amazing pair of shoes we have wanted. While some use only cash for all their purchases and other use credit cards, there are several advantages or disadvantages to using both forms. Each and every consumer needs to educate themselves on credit verses cash and issues such as convenience, spending habits, fees, and theft protection to secure their financial future. In today’s busy society, it is much more convenient to pull out a credit card to make a purchase today and pay later, credit cards allow for delaying the initial expenses or waiting period on larger purchases so you can have it now. Or when cash isn’t available, that unexpected expense occurs, such as the dryer going out or the car needs a new transmission. These purchases are generally quite large in amount, and without the purchasing power of credit cards, many consumers would be without the means to be able to react to life’s little emergencies. According to Dave Ramsey over 20 billion credit card purchases were made in 2011. Showing that people are taking advantage of convince of credit cards to the maximum. Online shopping has grown to a multibillion dollar industry. When making a purchase online, it is nearly impossible to use cash. Using debit cards which are connected directly to the card holders checking account in effect cash, is not recommended for online purchases. There is little to no protection from fraud or identity theft when using debit card for online purchases. The preferred method of online purchases is the use of credit cards for convince and protection. However, when establishing a cash budget individuals must develop a highentend awarnesse of spending habits, and prioritize them by need and importance. When planning a budget, first establish your needs verses your wants. Second, determine how much cash is available to fill in all the blanks in the budget. Once the budget is in place, it needs to be honored. When the cash is gone, the spending power is also gone. Individuals that use cash budgets tend to monitor spending by careful shopping, making better choices and spending only what is necessary. According to Dave Ramsey the average consumer spends an estimated 18% more on daily purchases when using credit than when paying with cash. And it is proven in studies that people actually experience a sensation related to pain when handing over cash verses charging to a credit card. A disadvantage of credit card use is the fees and charges one can incur with use of credit cards. The average interest rate for a credit card today is 23% on your total charges. With 45% of Americans making minimum payments on their credit cards this can add up to a lot of interest paid to the credit card companies. If there is a missed payment or it is simply mailed late, the interest rate can be raised as high as 34% along with a fee of up to $40.00 added to a growing total. The credit card industry takes in approximately $43 billion per year in such fees. The cash spending consumer does not incur any such fees when it comes to their purchases. Unlike credit cards, cash is very easy to steal and or lose. Some people fear that they are more likely to be robbed if someone sees them using cash to make purchases. Or simply misplacing their cash for the month can be very devastating, as when the cash is gone, it’s gone. In contrast, if your credit card is stolen or it is misplaced, a simple call to the company will resolve any future purchases on the cardholder. The company simply cancels the card and issues another card number. The cardholder is not liable for unauthorized purchases on the card, and credit is protected along with being maintained. Managing credit card purchases can be an effective tool in the planning of a financial future. Buy monitoring purchases, avoiding interest payments and late fees enables consumers to keep more of their money for things such as planning for retirement or savings. Others will argue that while most have the best of intentions, individuals have a tendency to make poor decision with credit card purchases. While using cash, there is no chance of incurring the possibility of such late fees. Purchases are not made unless there is money saved to pay for that purchase in full. Cash consumers have the advantage of actually seeing and feeling the efforts of budgeting as they can hold the cash in their hand. Holding a card is of no real significance to most.