When it comes to your finances and how you spend and save your money, everyone is different. Some people are cash only kind of people, whereas other use their credit cards for all their purchases. It comes down to how you manage your money and if cash only helps you keep track better, or if you prefer to use cards for the rewards systems to help you save on other things. We break down the pros and cons of both cash and cards and explain why millennials are moving more towards a cash mindset.
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’s 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.
Let’s face it, 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? Or are you now accumulating interest? It’s a revolving cycle 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.
But 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, etc. are all reasons that people use credit cards because you don’t get cash back for spending cash.
Whether you prefer cash or credit, it’s all about how you manage your money.