Are There Advantages to Using a Credit Card Instead of Cash?

Having and making use of credit is an important part of the American financial institution. Credit is crucial to allowing people to make purchases of items which they can pay over time, but are completely unrealistic for most to purchase immediately.

If people had to save before they were able to purchase a house outright, there just wouldn’t be many homeowners. Credit cards are a crucial part of the credit infrastructure. Credit cards are used for small to medium sized purchases. They are useful when people don’t want to carry cash, or are shopping through the phone or internet. They seem great, but are credit cards really better than using good old fashioned cash for purchases?

Answer: While there’s plenty of benefits to using a credit card, consumers need to be careful with their spending habits. 

First, let's look at some of the benefits to using credit cards instead of cash. The first is the potential for additional rewards. Many credit card companies offer additional “points” for using their cards. These points in turn may be cashed in for travel, to pay back the card or for any number of other reasons. Credit card points can be a nice little benefit and allow for people to take trips at a lower cost than they would have otherwise. 

Credit cards are incredibly convenient. Being able to simply swipe or tap your card and have an item paid for is great. Credit cards allow you to easily pay for any value without having to carry large amounts of cash in your wallet, making you less of an obvious target for potential muggers or thieves. 

The most important aspect of a credit card however is the ability it gives you to shop remotely. Online shopping has replaced physical shopping as the most common method of commerce these days. People still also enjoy purchasing items through the phone or from a television. Without a credit card, it’s often impossible to make these purchases. Credit cards are also required to sign up for services like Netflix or other subscription boxes. They can ensure that a payment will be received, unlike cash. 

With all of these credit card benefits, why should people hold back? Quite simply, the reason is that credit cards function on money that a person doesn’t have yet. If a person overspends, they may not be able to pay it back. The interest rate on many credit cards is very high. Only paying back the minimum each month while still making purchases can rack up debt at an almost astronomical speed. If your credit cards are full, then it’s possible that it will damage your credit score as well. Some people see the answer as getting more credit cards. This is rarely the answer. Too many cards is just as damaging to a credit score. 

Additional Resources

Any matter of finance needs to be carefully considered with appropriate research and deliberation. After reading about credit cards, you likely have some additional questions. These resources can help continue broadening your education on credit cards. 

  1. Credit Karma - This website helps people with many aspects of using credit including home, auto and others. This article helps to provide the ideal methods for using a credit card. 
  2. - This website is a great source of information for people on all information credit card based. This article discusses what will occur if you go over the limits of your credit cards and are overspending. 
  3. CNBC - Well known news source CNBC also provides a lot of information online. This specific article delves into the various rewards cards that are offered from different credit companies and compares their value.

Questions to Consider