subject: Sound Spending Habits: Cash Over Card [print this page] Sound Spending Habits: Cash Over Card Sound Spending Habits: Cash Over Card
A lot of times you can actually do without using your credit card and pay in cash. However, if you have grown accustomed to charging everything on your credit card, you will probably find it quite inconvenient to always bring enough cash around with your for daily and surprise purchases. Though you might find it inconvenient, it is wiser to start adjusting and changing your habits.
Paying in cash is a spending habit that is advised because it allows you to keep track of your finances more easily. Each time you pay for something, your wallet automatically gets thinner, giving you an idea of how much you have eaten into your daily budget. If you use your credit card instead, what happens is that you often do not realise just how much you have spent at the end of the day, increasing the tendency of overspending.
Aside from helping you stay on track with your daily budget, using cash instead of your credit card to pay for things almost always saves you money as well. The reason for this is that you need not pay interest on your cash purchases, unlike for your credit card purchases, which you have to pay interest on, if you do not pay off the entire credit card balance by the end of the month or on your due date. An exception to this, is when you do pay off the entire outstanding balance before, or when, it is due. Aside from the interest on the balance, which by the way adds up each time you charge something on your card, you can also end up paying even more on penalties if you do not realise that you have gone over your credit limit due to your "charge it" attitude. You might even end up with an unmanageable credit card bill and end up paying less than the minimum required credit card payment, which will incur late fees. By paying cash, you can avoid having to worry about these charges and use the money that would have gone to paying for these into something else you need or want.
Lastly, it is a good idea to pay using cash so that you can preserve your credit limit. If you do not always use your credit cards, you can be sure that you will always have plenty of credit accessible to you anytime your really need it. In case of an emergency, or in case credit cards is the only payment method accepted, you won't have to worry about running out of credit. Avoid using your credit card for unnecessary purchases and you will see the difference in your finances, as well as peace of mind.
