Obvious fact is that money remains one of the most important things in our life. It helps us to survive buying thing which is needed to our body: food, clothes etc. Sometimes we earn a lot of money and we need to save them somewhere, sometimes we need to make a purchase but we can’t afford it. What is the way out? It is credit card. The credit card has a lot of advantages over cash and vice versa. But what is it better to have? What way is it better to pay and make purchases? This essay is going to give advantages and disadvantages of both cash and credit card.
As a result, we will be able to answers these questions.
Cash or Credit?
Cash and credit card don’t have a lot in common. They both are used to pay for some goods and services, they are money but in different types of it. Money in cash is a sum of some which we really have, and money on credit card is not only money that we have but also money which can be offered us by the company.
The differentiation of cash and credit card should be based on the advantages and disadvantages that they have. This differentiation is to show what it is better to use: cash or credit, taking into account the type of life and different situation which we can have. One of the advantages using cash is that a person always knows how much he or she spends.
For instance, if a person has 50$ it means that there is no opportunity to spend 51$. With a credit card a person can pay for good or services and later forget when money have gone. Credit card allows spending more money than we have. Everyone loves “free money” but each credit must to be paid off, and the longer we wait the bigger amount of money we are to pay. So, credit cards build up the debts which we sometimes can’t handle (Evans & Schmalensce, 1999).
If we pay for something and then want to turn it back, credit card can’t allow a full payment back, there will be some charges. But if something is aid by cash, the full return is probable. Credit card helps people not to carry a huge amount of cash of use checks. So, credit card reduces the risks of losing money or to be robbed. Also sometimes a person doesn’t know when exactly he or she will want to make a purchase. So, credit card allows not going home or to the bank and take certain sum of money to pay for some goods or services. On the one hand, the credit card can also be stolen as cash. Moreover, it can be stolen as physically as by Internet. As a result, a person ought to be really careful for not to be cheated. If a credit card is stolen, its owner can understand it only after some period of time.
Thins period allows thefts to take all the money from card, or some information about the owner if they need it. On the other hand, the owners of credit card give special type of insurance, so these people shouldn’t be so afraid if their cards are stolen. Moreover, some types of companies have social reward programs for those who own credit cards, so a person can get 1-5% cash return from money spent for some categories of services of goods, or paying for bills by credit card in some stores (Ausubel, 1991). The credit card allows a customer to borrow certain some of money to pay for things. Obviously, there is a limit of money which can be borrowed. At the end of a month, a customer can pay all sums which were borrowed or pay it partly. Also, today we use Internet more than we did it previously. The credit card enables us to make a purchase by Internet when it is needed, which we can’t do using cash.
But here is one problem: if we use Internet store we can’t always be sure that the purchase we ordered will be delivered and that it will be in good condition. When we use cash, we see the goods we buy, we can touch it, smell it etc.; we just see exactly what we want to buy (Panurach, 1996). Moreover, if a person has some problems, for example, life and death situation, credit cards can become a saving ticket. If a person has a cancer, the treatment is too expensive. The insurance companies don’t give money for bone narrow transplant as it is called experimental. But this situation can’t wait till the dispute will be resolved. If a person had a credit card which allows borrowing money which is needed, the person can stay alive.
Even if after this operation a person becomes a bankrupt he/she can take part in different program which helps people in such situation; and at least he/she is still alive. If, unfortunately, the operation won’t help and the person dies, there is no need for relatives to worry about returning money back. In addition, if person travel and want to pay for something, he or she has to change the currency. With a credit card this problem disappears. A person doesn’t have to search for a change boxes and can pay with a credit card, no matter what currency is on it. And finally, it should be noticed that using credit card can help a person to build a positive credit history. It is very important when applying for jobs, loans, and even rental. With a good or even excellent credit history, a person can ask for loan to by a car or a house if a person can’t afford to any it at once (Chakravorti, 2003 ).
Conclusion
It is obvious that every type of saving and spending money has its advantages and disadvantages. Deciding what kind of it to choose, we must firstly understand what kind of life we have. For example, if a person travels a lot it is better to save and spend money using credit card. If a person decided to use credit card, it’s better to search for the best offer which provides its customers with insurance or some other benefits. It is wise to remember that credit card companies use different types of tricks and that is why everyone are to be careful using credit card. A person-owner of a credit card should save all checks to verify later if incomes match with expenditures. As a result, we can state a fact that the decision of using cash or using a credit card lies on a person and only on a person. Only we can make a decision which type of payment fits us more.
Reference
Ausubel, L.M. (1991). The failure of the competition in the credit card market. American economics Review, 81, 50-81. Chakravorti, S. (2003). Theory of Credit Card Networks: A Survey of the Literature. Network Economics, 2(2), 50-68 Evans, D.S., Schmalensce, R.L. (1999). Paying with Plastic: The Digital Revolution in Buying and Borrowing. Cambrodge, MA: The MIT Press. Panurach, P. (1996). Money in electronical commerce digital cash, electronic fund transfer, and Ecash. Comminucations of the ACM, 39(6), 45-50. Birukova, V. (n.d.). Advantages and disadvantages of credit cards. Retrieved from http://www.streetdirectory.com/travel_guide/151487/credit_cards/advantages_and_disadvantages_of_credit_cards.html
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