9th October 2017 - 5 min read
There’s no denying the value and importance of having physical cash with you at all times. But when the header above becomes a topic of conversation, much steam is produced in support or against each payment method.
Although, primarily due to credit mismanagement, some are still convinced that credit card use is bad for you. We’re about to reveal reasons why you should in fact use credit cards instead of cash and you will come to find that it may be more beneficial than having money in hand.
The use of cash can actually be more detrimental than credit cards because you may face a tough time figuring out where it all went unless you record every little spend and diligently hold on to receipts.
Credit cards, on the other hand, have statements that allow you to track every little spend (except at the mamak of course!) to better monitor the outflow of money. This of course is a great financial habit to have in being a wise spender.
Besides keeping track, it also saves you a tonne of time lining up at the ATM or rushing to one when you urgently need to make a transaction. Most merchants (eg: hotels, airlines, car rentals) are also making the credit shift with time and credit payments are now ubiquitously available on the grounds of convenience.
But beyond all these conveniences, a credit card is also easier to keep secure than cash. Lost your card? Simply call the bank and cancel it. You won’t then be stuck out of pocket because of the loss or worse, theft. For sure, you can’t call your bank to cancel the validity of the cash notes stolen from you!
Your credit score relies heavily on your lending and payment history with banks but how are banks to decide to lend you a big amount (for a house or car) if they have no idea what kind of paymaster you will turn out to be?
Having no credit can be almost as detrimental to your application as having bad credit (almost, though but not quite as we explain in a previous article). Luckily, having no credit can be rectified easily through the application, use and proper management of a credit card.
While physical cash has no contribution whatsoever to your credit score, credit cards can help bolster and accelerate your application process for large credit approvals through consistent and regimented repayment.
Big or small, purchase of goods and services with cash require immediate full amount transactions (situation dependent). Credit cards, on the other hand, grants its holder a grace period on purchases. Pay your debt within the grace period and you will be charged no interest (usually within 20 days for most banks). If you feel you need a bit more time, you can opt to convert your purchase to an easy payment plan that most banks have. You will have to call your own bank to find out more, though.
This grace period allows one to better gauge monthly expenditure and it leaves savings untouched up until the time when your credit card bill is due. You might think such an option is just encouraging irresponsible spending but when the chips are down and you have an emergency that cannot wait for time to save – you’ll be singing a much different tune.
Believe it or not, some people sign up for credit cards just to milk from a tonne of perks and benefits they offer. And we can totally understand why if pit against the use of plain physical cash.
Each bank in the local market offer different range of benefits, and one of the most popular is the cashback card, where holders are able to earn rebates from their monthly credit card bill as they go around swiping.
Then there is the rewards points. The more you swipe, the more you rack up easy to earn points, which in turn can be used to redeem handsome gifts from the catalogue.
When paying with cash, you pay RM100 for an RM100 item; when using a credit card, you can pay RM100 and get RM5 back in cashback or accumulate points for a freebie. It’s a way to always get more for your money.
This part is a given, because travelling without a credit card is almost like travelling with no money at all. The beauty of your plastic, is that it is accepted worldwide. MasterCard or Visa, your credit card can sometimes be the difference between peace of mind and getting caught between a rock and a hard place.
Take for instance a Metro in Paris, this writer was unaware that the automated ticketing system did not accept bank notes. With only bank notes in hand, he scoured the streets to get change but failed to do so and headed back to find out that the machine only accepted coins or his saving grace, credit card.
Most hotels and taxis abroad have also adopted payment in credit and this solidifies its inevitable universal acceptance position.
We are in no way disregarding the importance of physical cash. How else are we going to pay for nasi lemak at the mamak or street food at the night market?
However, many other lifestyle activities do offer payment in credit and the points above should be encouraging reasons as to why you should use your plastic instead of cash to get more from your every spend.
Are you looking for the perfect pocket companion? Use our credit card comparison tool and pick out one that works best for you!
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