In this post, I will be sharing my view on the advantages of using a credit card over cash.
In one of my earlier posts, I share about the danger of credit cards. And I do not encourage the use of credit cards. In fact, I highly recommended using cash instead of a credit card.
But, as time goes by, I realized there are many advantages of using a credit card over cash.
Read on my sharing below.
9 Advantages of using a credit card over cash
Basically, I discovered these advantages of using a credit card over cash in the past few years. Especially recently with the advancement of online technology.
In this sharing, I listed down 9 advantages of using a credit card over cash.
Further reading is below.
1. Convenience
For those of us who use credit cards frequently, you will know it is very convenient to use a credit card instead of cash.
Instead of paying with cash, paying with a credit card is truly convenient.
Especially now that we are practising Personal Identification Number (PIN) features that expedite the payment process.
All I need to do is to present my credit card at the payment counter. Within a few seconds, the cashier will ask for the PIN numbers for verification.
Then, once the transaction is approved, my purchase is confirmed.
On the other hand, if using cash, I will need to ensure that I have sufficient cash in my purse before I go to the payment counter.
If I don’t have sufficient cash, I will need to go to the nearest ATM to withdraw some cash.
Of course, I can choose to use a debit card. Provided I had updated my PIN number for my debit card.
But, somehow I find that I don’t prefer to use my debit card.
2. Hassle-free
A credit card is especially useful when come to buying big-ticket items.
Because it is rather troublesome to bring thousands of cash for shopping big-ticket items. For example, a new bedroom set or a new laptop.
Of course, I can choose to use other methods such as debit cards or chequebooks. But, I don’t like to use my debit card.
As for chequebooks, it is not very common here to issue a cheque for shopping purposes. It is also troublesome to bring along a chequebook for these big purchases.
Furthermore, I believe retailers prefer transactions through credit cards because it is faster and involves fewer procedures.
It also assures the sales is confirmed. Another advantage is that it prevents getting counterfeit money.
So, a credit card is a preferred method for big-ticket item purchases for both consumers and retailers.
It is really easy and hassle-free.
3. Safety purpose
Other than being hassle-free, using a credit card is also safer compared to using cash.
Bringing thousands of cash will attract pickpockets and snatch theft.
There are many cases of serious accidents caused by motorbike snatch theft who grab the victim’s handbag and drag the victim along.
Some of these victims are in a coma and fighting for their lives. It also caused death in some of these unfortunate snatch theft victims.
Even if there are no pickpockets or snatch theft incidents, bringing a lot of cash will create some tension and worry. Causing us not able to enjoy and concentrate on the actual activity.
Compared with cash, if the credit card is stolen, we will just need to call the credit card centre to report the case.
The credit card centre will deactivate that particular credit card and reissue a replacement card. So, this prevents the thief from using the credit card.
Thus, I prefer to bring my credit card and a limited amount of cash for small purchases when I go shopping.
4. Monitoring of expenses and records keeping
Personally, I realized that the credit card statement is useful for me to monitor my expenses.
Other than that, I also noticed that I will refer back to my credit card statements for some of my previous purchases.
Among the reason is for me to compare the prices of some of the items I bought. Previously I don’t practice keeping a full record of all my expenses.
Only recently did I start to record my expenses in detail using a personal finance app. But, I do keep the actual receipt of most of my purchases.
So, I find that it is easier for me to refer to my credit card statements instead of referring to the stack of my receipts.
Unless you keep a proper record of your expenses using apps or spreadsheets, credit cards statement will be able to assist as records keeping of some of your purchases.
5. Auto-pay or standing instruction tools
Another advantage of using a credit card is that a credit card provides an excellent financial tool for auto-pay or standing instruction.
Personally, I signed up auto-pay for most of my monthly payments.
Among the monthly payment which is using my credit card auto-pay are my life insurance premium, medical card premium, my mobile phone bill and my home broadband bill.
My husband also uses his credit card for monthly utility bills such as water bills and electricity bills.
Compared with payment by cash, using auto-pay via my credit card saves me a lot of time and effort. Especially when these transactions are monthly recurring charges.
6. Excellent travelling companion
For those of us who travel a lot, you will find that having a credit card with you give you peace of mind. Because you don’t have to worry about insufficient cash when you are travelling.
Usually, we don’t bring a lot of cash with us when we go travelling. So, it can be really troublesome if you are travelling and you don’t have enough cash with you.
Especially if you are travelling overseas.
I remember in my vacation trip to Taipei, my late father wishes to buy some of the good quality canned seafood as a souvenir back home.
But, we did not have a sufficient amount of New Taiwan Dollar (NTD), the local currency for that unplanned purchase. So, I used my credit card for that particular purchase.
In other words, having a credit card with you when you go travelling will be able to ensure that you have sufficient financial support for unexpected expenses.
7. Building good credit scores
Another advantage of using a credit card over cash is owning a credit card with a good payment history will improve your credit score.
In case you have no idea what is a credit score, it is a rating used by the financial institution to evaluate your creditworthiness. In other words, bank institutions would like to know if you are able to pay back the loan that they give you.
Basically, when we apply for a loan, the financial institution will use the credit score to decide whether or not to approve the loan application. If you own a credit card and you pay promptly, this improve your credit score.
On the other hand, you own a credit card and you didn’t pay promptly, this will reduce your credit score. But, if you own a credit card but you didn’t use it, you will have no credit score for the credit card portion.
So, instead of focusing on using cash, use your credit card wisely to improve your credit score.
In case you wish to know your credit score, you can check it out at the CTOS website.
8. For online transactions
Many years back, somewhere in the early 2000s when AirAsia started its buy your air ticket online thing, I helped my family members purchase the air ticket online using my credit card.
Because at that time, some of my family members don’t have credit cards.
As time goes by, they started to have their own credit cards because they realized that they need credit cards for online transactions. And the fact that they cannot always rely on someone else for online purchases.
Nowadays, we can buy most of the things and services online. I believe in the near future, most transactions will go online.
So, that is why having a credit card is crucial for online transactions.
Even though we can pay using a debit card or direct debit from online banking, but I believe many of us prefer to use a credit card.
The reason behind this is the cashback and rewards offered by credit card companies. Which I will elaborate on below.
9. Earn cashback and rewards
As mentioned above, compared with other payment methods, credit card offers cashback and rewards. Some credit card companies even offer very good sign up offers such as mobile phone sets, tablets, digital cameras and shopping vouchers.
Personally, I love the cashback reward offered by my credit card company.
Occasionally, the credit card company also offer an additional discount at selected stores. This gives extra savings compared with purchases by cash.
There are also credit cards that give you extra savings on rebates for groceries shopping, petrol, fine dining, Airport Lounge access, free travel insurance, auto-pay subscriptions and many more.
The best part is you can easily apply for these credit cards online.
Final thoughts
Even though there are many advantages of using a credit card over cash, the most important part is self-discipline.
Because without good self-discipline, a credit card can bring huge financial disasters such as bankruptcy.
This happened when one overspent and failed to pay accordingly.
Simply because credit cards give us the opportunity to spend future money.
On the other hand, by using cash, we only can spend what we have in hand. Thus, it prevents us from falling into debt.
To summarize, if you have good self-discipline and are great at managing your finances, by all mean reap the excellent benefits of using a credit card.
Else, it is advisable to use your cash until you learn how to control your spending habits.
I hope my sharing on the advantages of using a credit card over cash bring fresh insight into this matter.
Feel free to share your view and comment below.
