Are You Ready to Say Goodbye to Cash?

/ BY / Personal Finance

The U.S. may be moving to a cashless society, according to a recent study conducted by Rasmussen Reports. In a telephone survey of 1,000 American adults, it found 43 percent of those interviewed had gone a week without using any bills or coins to make purchases.

Which do you prefer? There are some good reasons both for and against pulling out your credit card instead of dollars when you’re making a purchase.

Here are the pros for using credit cards:

Credit cards are convenient.

It's a lot easier to pull out and swipe a credit card than to comb through your wallet looking for enough bills and change to pay for a hamburger or buy something from a drug store.

Credit cards can help you track spending and stay on a budget.

When you buy most goods and services with a credit card, you have a record of where you spent the money. You can check your monthly credit card statement to see where you’re going off budget.

Credit cards let you hold onto your money a little longer.

When you pay by credit card, you can take advantage of float. You have at least a few weeks from the time you make the purchase and the time you have to withdraw money from your bank account.

Credit cards can provide an extra layer of financial protection.

Some credit cards provide extended warranties on goods that you buy with them. Some provide additional insurance protection when you rent a car, enabling you to waive the expensive rental car collision and theft protection.

Credit cards can bring you rewards.

Earn airline miles, gift certificates to stores and restaurants and even cash back. When you earn rewards by using your credit card, it's like getting free money, especially if you pay it off each month.

Credit cards are easy for travel.

If you're making a whirlwind tour of Europe and visiting several countries in the process, it's much easier to carry a credit card or two than it is to deal with changing dollars to Euros. Although some credit card companies do assess foreign transaction fees when you use your card overseas, Capital One and Discover have eliminated those fees and others (like Citi, Chase and American Express) have done away with them on certain cards.

Not convinced that credit is always best? Here are a few compelling reasons why cash may be better:

Credit cards make it easier to overspend.

If you withdraw $100 from a bank and use it to buy groceries or a movie ticket, you actually see the money disappearing as you use it. With credit cards it's all too easy to forget how much you’ve spent—and that you’re ever going to have to pay that money back.

Credit cards can end up costing you in interest and in fees.

If you pay $1,000 in cash for a new television, that's all the television is going to cost you. But if you buy that television on a credit card and end up paying it off over time, you’ll actually be paying more for that television because you’ll be paying interest on your purchase.

Using credit cards can also be expensive if you end up paying fees for going over your credit limit or for being late with a payment.

Credit card purchases for some goods may cost more than purchases made with cash.

Since merchants have to pay a fee for every credit card transaction they accept, some (notably gas stations) may offer a discounted price for paying with cash. You save money.

So which do you choose, cash or credit? Although experts have long predicted that w'll eventually become a cashless society, for now, at least, you still have a choice.

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Please note your financial situation is unique and our tips & advice presented here may not be appropriate for your situation. CreditCardXpo.com recommends that you seek different advice & opinions from your own accountant or financial adviser who understands your individual circumstances before making any important decisions or implementing any financial strategy.