And how will you be paying? How we are spending our money has a huge impact on our budget. Because when it comes to your finances and how you spend and save your money, everyone is different. The same way GoDay is an online payday loan lender compared to a physical store you walk into, everyone has their preference when it comes to managing their money.
Some people like their cash. Don’t we all? But physically having and only using cash to pay for purchases is what some people prefer. Where other people like to use cards for all their purchases. What it really comes down to is how you manage your money. Some prefer cash only because it helps them keep track of their spending better, compared to those who like to use their cards for different reasons like the rewards systems they offer that can help you save on other things.
There can be pros and cons of both cash and cards, so how do you know when the best time is to use one over the other? We go through the options of both.
According to a Bankrate.com survey, just one out of three millennials carries plastic compared to the majority of older Americans. In addition, the Financial Post also reported that a Fed survey found that those in the 18 to 24 demographic preferred to pay cash compared to others. And if they do carry a card, it tends to be a prepaid or debit card. But why is this? According to the Toronto Star, millennials are more likely than older generations to have student loans to pay, yes, debt. About 41 percent of those surveyed had student loans. That compares to, 26 percent for generation X; 13 percent for baby boomers; and 3 percent for the silent generation. And it is because of these financial obligations that could explain millennials’ hesitance towards borrowing. Over time, those who have debt may never be as comfortable with credit cards and debt as previous generations have.
By going with the cash only method, you are seeing first hand where your cash is going and by only having so much of it available, it will also help curb your spending habits on what may be unnecessary items that you never realized how much you were spending money on (which we know is easily done with your cards). This is also a great opportunity for you to re-evaluate your budget and contribute what you would be spending to savings or dedicate this cash to paying off your credit cards or any debt you may have. There are also downsides to always paying with cash as well. One is you’re not building any credit. That’s right, it is your ability to pay your monthly bills and debt off that creates your credit score and what is used for things like applying for a mortgage, renting an apartment, getting a cell phone or even getting a payday loan with GoDay.
Another downside to paying with only cash is you’re not receiving any of the benefits credit cards offer. Because yes, credit cards can have their perks as well; it’s all about finding the right credit card for your finances. Things like cash back options, paying off your balance with the points you’ve accumulated and different cardholder perks like travel insurance, accommodations and vouchers etc. are all reasons that people use credit cards- because you don’t get cash back for spending cash.
Because, let’s face it, as great as some of these credit card rewards and programs can be, we all dread that time of the month, when your credit card bill comes in and the shock of how much you’ve spent this month. Have you blown your budget? Are you now dipping into savings to pay off the balance? Are you paying the entire balance off? Are you now accumulating interest? Are you being stretched too thin financially? It’s a revolving cycle that we’ve talked about before and a very tough one to break, which is also a reason people stick to cash. According to a report released in 2015, nearly half of all Canadian credit card holders (46 percent) are carrying credit card debt.
To make sure you are using your credit card wisely is to recognize that if your monthly balance is continually growing and you are unable to make monthly payments in full, it is okay to stop using your credit card until you can properly manage your finances and look for ways to help get your budget back on track. A good tip from About Money is to keep your spending within 30% of your credit limit making payments easier to manage. Because, one of the worst things you can do financially (like any bill) is not make your monthly credit card payment. Always let your creditor know if you are unable to make a payment as they will usually be able to help and to avoid late fees. You also don’t want to miss payments as this will affect your credit score that you’re trying to build as we just mentioned. But it is for times like this that GoDay’s short term loans are readily available for you. Our payday loans are here to make sure you can make those payments when you’re in a financial pinch and so you don’t fall further into the credit card debt cycle.
Whether you prefer cash or credit, it’s all about how you manage your money. If cash is what works best for you, stick to it. If you’re looking forward to the many offerings credit cards have then make sure they’re the ones best for you. The only thing to avoid is using your plastic unwisely. Debt can be costly. As long as you’re not succumbing to the temptation to spend beyond your means simply because a credit card with an available balance is in your wallet and focusing on using it as a tool to get added value from your planned spending instead, you will stay out of the red.
Do you prefer cash or cards? Let us know in the comments below.