Pros and Cons of Having Credit Cards (Part 1)

July 5, 2013

Benefits of using cash instead of relying on credit cards include spending less, having a tangible sense of the cost of items and avoiding credit card debt.

Some of the benefits of using cash instead of credit cards include spending less, having a tangible sense of the cost of items and avoiding credit card debt.

Although many people rely on credit cards to make their day-to-day financial transactions, an increasing number of people are choosing to forego having credit cards, opting instead to only use cash or their debt cards to buy things. The trend of moving towards not having any credits has been, for some, spurred by past accumulation of massive credit card debt and the desire to avoid digging such a financial hole in the future. In fact, according to a 2010 survey conducted by CreditCards.com, approximately 29 percent of respondents stated that they did not own any credit cards. This was a 10 percent increase from those who claimed to not have any credit cards in 2009.

For those who are choosing to not have any credit cards, some of the benefits can include (but are not limited to) the following:

  • Generally spending less money – A 2008 report compiled by a profession of NYU found that consumers generally spend less money when they use cash to pay for purchase instead of using credit cards.
  • Paying more attention to the cost of purchases – In line with spending less money, when consumers use cash instead of credit cards, they tend to pay more attention to how much a good or service costs (as opposed to focusing more on the benefits of the good or service purchased when using a credit card).
  • Developing a greater sense of financial discipline – As consumers use cash instead of credit cards, research has shown that they have a more tangible sense of where their money is going, which helps instill a greater sense of financial discipline. Ultimately, consumers who use cash instead of credit cards can, on average, spend 20 percent less than they had when they relied on credit cards.

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