Credit and debit cards are powerful tools that offer simplicity, security and convenience. You can swipe away your purchases, from movie tickets and groceries to utility payments and online shopping. Take a look at how plastic money is better than carrying cash.
1. Ease of use and convenience
With credit cards, you are using the bank's money up to your credit limit. The amount you use, has to be paid back to the bank. If you pay your total outstanding before the interest free period ends, you incur no charges. If not, like any other loan, interest is charged.
Debit cards on the other hand are a way to access the funds in your bank account with ease. You can also use it to spend at a merchant outlet, withdraw cash or make an online transaction.
2. Secure transactions
When you own credit or debit cards, you don't have to worry about carrying wads of cash in your wallet. Now with chip cards and pass codes, they offer secure transactions. So if someone steals your wallet or you lose it, all you have to do is call the bank and block the cards. No harm done.
With growing crime rates and increasing dependence on online transactions, it becomes imperative to move from cash to plastic.
3. Reward points and incentives
Both credit and debit cards and especially co-branded ones have excellent reward programs. With every spend, you accrue points and you can redeem them for free fuel, lounge access and reward points at retail partners, air miles, cash back and much more.
So when you use cards, you get back a small amount of what you spend.
4. Deals and discounts
Consumer offers in the form of discounts, free products, gift coupons etc., at both online and offline retail partners are a regular feature for credit and debit card users. Sometimes, cardholders get deals over and above the discounts offered by online and offline merchants.
5. Spending limit
Both credit and debit cards have limits to which you can spend while using them. Debit cards allow you to spend from your bank balance within the daily limit set by the bank. With credit cards, your spending capacity is not limited by your bank balance. However, you will have to keep track of your credit limit, to ensure you don't spend beyond it.
6. Charges
Plain debit cards do not incur any charges, whereas branded debit cards have annual fees.Some credit cards have joining fees and annual fees. Interest is charged when total outstanding is not paid in full before the interest free period.
In the end, it comes down to your choice on a case-by-case basis. It is about how you can manage the money that you have in your account and the money you are ready to borrow and are capable of paying back. You might want to get more rewards and prefer to use one type of card over the other.Whichever card you pick, using cards is smarter and more beneficial than using cash.
FAQs
Secure transactions
When you own credit or debit cards, you don't have to worry about carrying wads of cash in your wallet. Now with chip cards and pass codes, they offer secure transactions. So if someone steals your wallet or you lose it, all you have to do is call the bank and block the cards.
Why debit card is better than cash? ›
Here's why: Convenience. Debit card payments allow you to complete transactions without having to fumble for cash, dig around in your purse or pockets for exact change, write out a check or go to an ATM. And with more and more businesses now offering the option of debit card payments, it's more convenient than ever.
Why use card over cash? ›
Credit cards are often more convenient and secure than carrying cash. As long as you can pay your bill in full each month, using a credit card is typically more advantageous than using cash for in-person purchases. You need to use a credit card for online transactions as you can't pay in cash.
Why is card safer than cash? ›
With a credit card, fraudulent charges are much less of a concern, as it is not your money — but rather your credit. And nearly all credit cards come with zero liability protection.
What are the 5 advantages of money? ›
But cash offers other important functions and benefits:
- It ensures your freedom and autonomy. ...
- It's legal tender. ...
- It ensures your privacy. ...
- It's inclusive. ...
- It helps you keep track of your expenses. ...
- It's fast. ...
- It's secure. ...
- It's a store of value.
More recently, a Forbes Advisor survey from December 2023 shows that less than 10% of Americans primarily use cash to pay for purchases. Debit cards and credit cards are the primary payment method used, with 53% of consumers using a physical or virtual debit card and 37% using a physical or virtual credit card.
Is it safer to carry cash or card? ›
Security: Carrying a wad of cash is rarely a good idea, especially when you're away from home and distracted to the max. If your wallet is lost or stolen, any cash is probably gone forever. If you lose your credit card, you can cancel it online or through the app and get a replacement expedited to you.
Is it better to hold cash or card? ›
“You may use cash for buying dinner, but use a credit card for bigger purchases just because it suits your budget and your financial style better,” Griffin says. Not to mention, carrying cash as a back-up is a smart idea in case there is an everyday purchase you want to make where the vendor doesn't accept credit.
What are benefits of debit card? ›
Pros of debit cards
- They're highly convenient. They're faster than writing a check and are widely accepted by retailers. ...
- They typically don't have any annual fees. ...
- They can help with budgeting by discouraging excess spending. ...
- They don't charge interest.
Frugal consumers may prefer to use debit cards because there are usually few or no associated fees unless users spend more than they have in their account and incur an overdraft fee. (The no-fee advantage does not hold for prepaid debit cards, which frequently charge activation and usage fees, among other costs.)
There is also a practical security advantage with cash. Although debit and credit cards often have personal identification numbers (PIN) and chips for extra security, there is less risk of identity theft or your information getting stolen online when using cash.
What are 5 disadvantages of debit cards? ›
Disadvantages of Using a Debit Card
And while debit cards may not have annual fees, you should be aware of other fees that can be associated with them. Monthly maintenance fees on checking accounts, overdraft fees, NSF fees, and out-of-network ATM fees can all be associated with using a debit card.
Is cash a high risk? ›
Answer and Explanation: Cash is a high-risk item on the balance sheet because it is the most liquid asset of a company and can easily be stolen. The actual audit program of cash is not considered as high risk because the procedures for handling cash doesn't normally change.
What are the disadvantages of cashless money? ›
One of the disadvantages of cashless payment is the breach of data by hackers and loss of money due to fraudulent transactions. However, there are counter measures implemented to prevent frauds. You can read about the Cashless Economy in India – Definition, Types and Advantages for UPSC Economy in the given link.
