IndiaLends Advisory

By IndiaLends Advisory

Apr 04, 2018

Is cash really better than credit cards?

It’s a popular idea that cash is always the best option. The idea has been brought down with the ages, handed to us by the generations before us, who are still very comfortable in the milieu of using hard money. Cash feels real when you pay with it. It feels like you’re actually making a mindful expense, and it’s not as effortless as swiping a card.

The primary reason that is usually stated to prefer cash is the anonymity associated with it. Cash can’t be traced, at least not as easily as digital transactions can be. And anonymity, of course, is comforting. However, it’s a comfort that is perhaps rooted in being a little vary of the advancing world.

The simple truth is that cash is not always better than credit cards.  There are various reasons for it:

Cards are more convenient

Using a credit card means you do not need to carry around a lot of cash. This is especially more convenient when you’re making big purchases.

Say, you’re buying a new LCD screen, or a big double door fridge, that will likely cost you ₹50,000 or more. Now, if you were to rely on cash, you would have to plan in advance, and ensure that you carry the appropriate amount of cash to make the purchase. However, using a card means you don’t have to do any of that. You can simply carry your card, swipe it, and voila, you’re done!

Cards are safer to carry around

If you lose cash, or it gets stolen, the chances of you ever getting it back are next to nothing. However, if the same happens to a card, your chances of damage control are far better. All you have to do is make a call to get your card blocked, and all your money is safe right there.

What makes it even better is that all card companies have some form of limited liabilities clause in place. You can check these details when you apply for a credit card online, or otherwise. So, even if transactions are made on your card after you have reported it stolen, you are not liable to pay for them. What’s more? Your card issuer will send you a new card, with a different number. And all this time, all of your money is safe in your account.

Cards give you more power to spend

With cash, you are limited to only spending what you have in hand. The best credit cards, on the other hand, provide you with additional spending power.

Credit cards run on a billing cycle, which means you can spend now and pay later. At the end of each billing cycle, you receive a bill not much different from a phone or electricity bill. The credit card bill would have the list of your total purchases for the month, and how much your total due is. It would also have a minimum due listed, which means that if you pay this minimum amount, you can carry forward your remaining payment to the next month. Using cash means you would never have this option.

Moreover, credit cards are especially useful when making big purchases. Why? Because they let you convert your bigger spends into EMIs. So, that smartphone you want to buy… you can buy it with a card and pay for it in the next few months through EMIs.

Cards help you save more

With a credit card you can practically save on each spend. We are not just talking about offers and discounts here. Cards offer you reward points for every spend you make, sometimes even upto 10x reward points for certain spends. You can use these collected points for shopping, or travel needs, or even cash back.

So, with the top cashback credit cards, you can actually save upto 5% of your everyday spends. With certain cards, you can save a lot more. Like, enjoy 15% off on dining, upto 30% off on travel needs, and so much more.

Cards enable you to build a good credit history

A credit history, as the name suggests, is the detailed history of an individual’s credit accounts. A good credit history has become increasingly important lately. Every financial institution will check your credit report before they approve a loan or card application. With a credit card you can build a good credit history, and enjoy all the benefits that come with it.

Have credit questions? Find answers to the most common credit card questions, from how to build good credit to lowering your interest rate. Click here and get answers to some of the top credit cards FAQs.