What payment method should you use when making purchases?

Contributed By: Jon Freeman

Should you use Credit, Debit, or Cash when making purchases? The question is one you have probably thought about before. You may have even thought about it earlier today when making a purchase. If you were to ask a handful of people on the street it is unlikely they would all have the same answer. In fact, different personal finance gurus, authors, and radio personalities will have different opinions on what payment method you should use. According to an article in Kiplinger’s Personal Finance magazine’s March issue, “Each method has pros and cons. Your best bet is to stay flexible.” Here is a breakdown of what the Kiplinger’s article said were the Pros (+) and Cons (X) to credit, debit, and cash:

Pick Your Payment

Credit Cards
+ Cash back, miles or points from rewards cards
+ Perks such as purchase protection and travel insurance
+ Grace period gives you an interest-free loan
+ Strong fraud protection
+ Builds a credit history
X Interest charges can add up if you don’t pay balance in full
X Fees for late payments and for some transactions
X Easy to overspend

Debit Cards
+ Spending limited to your bank account balance
+ No interest charges or monthly payments
+ May qualify for high-interest checking
X Few debit cards offer cash back or other rewards
X Weaker fraud protection than with a credit card
X Fees for overdrafts
X Doesn’t build a credit history

Cash
+ Easy to set spending limits
+ Can’t be stolen in a data breach
+ Some retailers offer a cash discount
X Can’t track spending automatically with budgeting apps
X Typically, fees for out of network ATM withdrawals
X No protection if stolen
X Doesn’t build a credit history

To read the entire article you can check out the March 2017 issue of Kiplinger’s Personal Finance magazine at your local Gwinnett County Public Library.  Remember that you can always access finance information online through the Gwinnett Library’s GCPL Personal Finance Guide.