Cash Vs Credit

By Bridget White

I recently read a Reader Digest article by Elizabeth Tavares on Eight Times When You Should Always Use Cash.? It’s these types of articles that screw up those who don’t know anything about credit.? So, I will make this simple.

I am not a financial guru by any means, but my credit score is pretty decent after surviving a divorce and repo that came from that divorce and I fixed it all without a Bankruptcy.

Ms. Tavares claims the overall purpose per her research is to “spend less by using cash”, this is overall true, it's not the best way to build a credit score.? A buyer will benefit by using cash for small purchases, this will overall reduce usuary fees.? It is better to use cash with Budgeting, but as someone who does do budgets for a living, as part of my job and I have taught fiscal management to single homeowners, I would encourage using a mixture of both cash and credit.

I disagree with using cash for furniture purchases or for anything over $100, such as big-ticket items, even if I have the cash… Store discounts, are best received by using their in-store credit financing, i.e. the store credit card, unless you are buying in a small town which may offer a cash purchase credit, cities typically don’t follow that rule, so it will depend on the location of your purchase but use the one that does offer the best price scenario.

Convenience, what is more convenient a card or a wallet full of cash?? Cash is not convenient, unless you are at a pay as you go situation, festivals, amusement parks etc.? those are the best scenario for cash.? Cards are more convenient overall.

The article continues to claim, “it limits company tracking?”? Ok, y’all, in the world we live in, you are being tracked – phone, laptop, cars gps, Alexa, Ciri, and yes, credit cards.? So, if you are concerned over that, then by all means live in a shack in the forest and use only cash.? Or you can be like Elsa and "let it go", because everything you do is tracked, stop buying into the conspiracy.? They already know that you like to go buy ice cream and a pack of beer at 3a.m. on a Thursday night, whatever they can build from that purchase, more power to them.

If you don’t use a credit card, you cannot effectively grow your credit.? Good credit, no matter how good you are with cash, cannot grow without getting at least one credit card.? You can grow your credit with a car purchase, or a house purchase through financing, but you need a card to actually grow credit.?It is a delicate balancing act that people have no idea how to do it.

What you can’t do without credit, in most places, you can’t effectively travel, get a rental car or hotel room, you can’t buy concert or theater tickets, you can’t pay bills by mail unless you use online banking or a check. If you are able to use cash in any of these situations effectively without going to a desk and hoping that the company, you work with agrees, I would be deeply surprised. i.e. it's possible by not probable.

What I did, was I pay all my bills with my credit card, and I pay it off every month. ?A few times a year I leave a small balance and pay it off slowly over a period of one or two months, this increases balances for the account.? If you pay it off early every month you can grow your score by a min of 3 points.? Credit can also be dinged by opening too much credit or if you don’t pay your bills on time or revert to just paying balances either, as this is where many fall into the trap of not being able to pay off their balance.

The key is to know your spending habits and don’t overspend.? Sure, cash is great and may be able to help you learn what those spending habits are, but cash has its place.? A mixture of both will grow your credit and once there, a higher score offers better pricing and APR for larger purchases such as a car or a home.