web analytics

Credit Cards, Debit Cards, or Cash – Which is Best?


With all of the different options of not only rewards credit cards available today, but debit and prepaid cards offered by the growing number of financial institutions, deciding which is right for you: credit cards, debit cards, or cash, can be tricky and require a lot of research.

Let’s examine the pros and cons for using credit cards, debit cards, or cash individually.

Credit Cards

It may seem obvious, but when you apply for a credit card you are entering into an agreement with the credit card issuer. You are agreeing that you will pay back a certain amount of money at a certain time, in addition to a certain amount of interest. If you trust yourself to pay your bills on time and can afford the interest involved, then credit cards are a handy addition to your financial planning arsenal.  On the other hand, using a credit card will always involve some level of debt, so tread carefully when applying for a new credit card and considering credit cards, debit cards, or cash.

Debit Cards

Also known as that, “Pay-what-you-have Card”, debit cards are a safer alternative to credit cards. Using a debit card will prevent you from racking up debt that you are expected to pay back at a later date, however, it can still come with all of the fees associated with traditional banks, which vary from one institution to the next. As convenient as a debit card linked to your bank account might be, it will never be as easy to wield as any credit card. Another thing to consider with credit cards, debit cards, or cash.


As easy as it is to simply carry a wad of cash with you at all times, and avoid not only piling up credit card debt, but all of those annoying ATM fees, it can actually be very limiting. Not only are you missing out on all of the sign-up rewards and bonus which major credit cards are constantly dishing out, but in order to buy anything online, you will need to provide 16 little digits which can only be found on a credit or debit card. Also, while losing you credit or debit card is often harmless and can be resolved by the bank quickly, losing all of your cash can cause permanent and irreversible financial damage.

When considering the benefits and detriments of using credit cards, debit cards, or cash, it is best to develop a financial plan which is unique to your life and financial goals, and unless you were born in the 1800’s, you are going to want to use a strategic combination of credit, debit, and cash in order to meet those financial goals.

A good financial plan will involve utilizing credit cards, debit cards, or cash at different stages in your day to day life, which is why building up a history of good credit is so essential to financial development later in life. We recommend individuals do an honest assessment of scenarios in which each would come in handy in order to decide which works best for you and your life.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: