Plastic have become so much the in thing when it comes to financial transaction that cash might as well be dead. Well, maybe not. But while there may be some benefits in using cash for your purchases and everyday transactions, they are even more benefits to using credit cards.
If you can use plastics responsibly, you find that you are better off doing your payments with a credit card than with cash. Let us examine why the credit card comes out on top and why you should minimize your use of cash.
Credit Card builds up your credit rating
When you charge your expenses to your credit cards and promptly pay them up every month, you are building up a very strong credit score. This way, should you ever need a loan or a mortgage, or want to buy an insurance premium; you can simply walk into their offices and get the best interest rate possible. Why? Because they will use your credit rating to know that you are a good risk.
You might not believe it, but it is far more convenient to easily swipe your card during purchase instead of having to count out cash (You might not even have the exact amount on you). In fact, a lot of hotels, airlines and rentals no longer accept cash for transactions. Plastic makes it easier to get your purchases done without having to worry about coming up short.
With all the hacking and identity theft going on, it seems more reasonable that carrying cash would be the solution against these thieves right? Wrong. Of course, banks and credit card companies are susceptible to hacking (it’s not that easy though), but do you know how risky it is flashing a roll in a jewelry store at night? People get hurt and killed for lot less cash that it would take to buy jewelry. But when your credit card is stolen and used fraudulently, you simply notify your credit card company or your bank that will put the transaction on hold until the case is resolved. This way, you don’t get to lose money.
You can earn rewards and points when you use your credit card for transactions. Rewards like hotel stays, shopping discounts, frequent flyer miles to be used when you fly and even cash back. Although there are reward programs that work for cash purchases, these are usually specific to retailers, but credit card rewards are bigger than your regular loyalty rewards. And what’s more? You can actually choose the type of reward you want. If you travel often, get a frequent flyer miles reward and if you would rather have cash, then by all means, go for a cash back rewards.
One good thing about plastic though, is that you get access to a detailed list of all your transactions, everything you have spent money on that month. This makes it easy to know where and what to enforce a budget on. You can then control where you money is going, something that is not very possible with cash at your disposal.