Before I get very far, let me say this:
I know I may be in the minority in the personal finance community.
Even with all of the credit card churners and travel hackers.
When it comes to the credit vs. cash debate, many still hate credit.
I’m perfectly ok with it.
I have no problem saying that I like my credit cards.
I like the benefits they bring me, many of which I have used.
Some I was thankful for access to after I needed them.
And, I figure if J. Money can say I’m a Bottled Water Drinker & I’m Not Afraid to Admit It, and not care about what the feedback will be, then I guess I can do the same about credit cards.
So without further delay, I’ll get to my points.
Why do I love my credit cards so friggin’ much?
Which is easier to carry around: $10,000 in cash or a thin piece of plastic with a $10,000 credit limit?
The plastic weighs less, fits better in your wallet (fits better anywhere on you for that matter), and doesn’t require a second belt to hold your pants up.
And for the ladies, you can still carry around your little clutch (or whatever the new “in” thing is called these days) and not have to worry about having room for everything else you need to carry along with you.
Plus with all the coinage, who wants to be hearing it jingling in their pockets or even have to carry it in the first place?
Security and Insurances
Have you ever heard of your bank limiting your losses if you lose or have your wallet full of cash stolen?
I didn’t think so.
Have you ever heard of a thief getting caught when using cash they stole from someone?
I didn’t think so.
And btw we’re not talking about bank robbers in this case!
Have you ever heard of anyone able to call the bank and cancel their cash when they realize it’s been lost or stolen?
I didn’t think so.
What happens if your cash goes in the washing machine and comes out as a ball of mess?
What happens if you have a dispute with a merchant and need someone to intervene on your behalf, do you call the cash patrol (don’t ask, it’s the first thing that popped into my head) like when you have a problem with a credit card purchase?
Jim Wang made reference in Three Insurance Policies to Skip to credit cards and extended warranties saying
They usually are not worth it because you are almost always protected by another means, especially if you pay with a credit card. Many credit cards double the manufacturer’s warranty for up to one year, it’s a feature you’re already paying for.
It doesn’t end there, no siree.
These days, credit cards also offer travel insurance and car rental insurance too.
The specifics differ depending on the bank and specific branding, but it is there just in case you need it, and keeping you from paying extra for the coverage from the airlines, car rental agencies, etc.
Does your cash provide that kind of service to you?
Budgeting and Recordkeeping
I’m sure everyone reading this uses some sort of personal financial software like Money, Quicken, Quickbooks, Freshbooks etc.
How great is it to just press a button and have all of your transactions appear in the register, and coded to the proper expense category to boot!?
How easy is it to put all of your expenses (well, ones that you can charge at least) on one card and not have to worry about going to this site or that site to make a payment?
Yes, I know that you can use the bank’s bill pay but I like my payment to be made and recorded right then and there, and from my experience bill pay takes days before even initiating the transfer.
How many times have your cash transactions made it easy for you to track and categorize them?
What’s that you say?
That’s what I thought.
Probably not the best reason for many people, but it is still a very viable and beneficial reason why credit cards trump cash nonetheless.
Let’s put it this way: your bills and expenses have to be paid for one way or another, so you might as well use the plastic for it and get something in return.
Since most of the credit cards have online “malls”, you can even make your regular purchases for bonus points and accumulate the rewards even faster.
Now, you might not be rewarded right away, but I guarantee you that if you do it the right way and earn yourself enough point/miles for a family vacation then you certainly won’t be too unhappy, no?
In addition, depending on the brand of card, you get other benefits; access to airline clubs, special rates at hotels, free shipping deals, early notice of sales or promotions, etc.
The credit card is always in your wallet, which is always with you–well, at least it should always be with you.
Unlike cash, which is oftentimes pulled out of a pocket and thrown onto a table someplace, where it can be easily forgotten.
Oh, wait, what about the times when you run out completely?
Time to drive over to the ATM.
But wait again, what happens if you have to drive across town because you use a bank or credit union that doesn’t have a branch near where you are???
Or if your branch is servicing the ATM when you get there?
Or even if–gasp!–it’s out of cash or even order?!
Then you have two options:
- Waste time, and gas (which is to say more money) in order to avoid the out-of-network ATM fee, which is a double-whammy if your bank charges its own fee too, or
- You can just suck it up and go to the nearest ATM and hope the fees aren’t crazy high!
I recognize the arguments against credit, and for the most part I respect them.
Of course you may need cash for certain things like paying the neighborhood kid to do things for you or to buy Girl Scout cookies or lemonade from the kids down the block.
However, I’d be willing to bet that most of them are so technological that you can send them a PayPal payment, Venmo or bank transfer, or even use their own card swiper and not even need cash!
There are certain things I totally disagree with, though.
One in particular being that credit itself causes people to go into debt, but for more on that read Credit Is Not The Enemy, You Are!
Sure, there are going to be people who are going to want my head on a platter for this since it may go against their “no credit/debt” lifestyle, but I can live with that.
Sometimes you just have to do what works best for you and not worry what anyone else things or is going to say.
So what say you on the matter?