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It’s your money, but it seems like there are dozens of ways to pay for it. Does your head spin when the cashier asks “will that be cash, credit or debit?” Don’t know what the smartest option is? Here, we break down each method of payment, and explain its pros and cons, along with example scenarios. We help you find the smartest method of payment for your situation.
payment method: cash pros,
- Universally accepted, easy to track spending patterns, always be aware of your “balance” without having to dial 1-800 numbers or log in to a bank’s website.
- You avoid bank maintenance, overdraft and other fees.
- In the event of a wallet containing cash in your purse being lost or stolen, though it would indeed be a setback, only the amount of cash contained in your wallet/wallet would be lost. In other words, you don’t risk having your entire account deleted. You’re also at less risk of becoming a victim of identity theft, because a potential thief doesn’t know how much money you make, your level of debt, or what’s in your accounts. There is no personal information that they might otherwise find on checkbooks or credit and debit cards. Most thieves won’t take the risk if they don’t know whether the target person has money, assets or just a load of debt.
- As far as money transfers go, it can be easier and faster to use cash, wire money, and use money orders to pay bills. It also provides more security for your personal information than writing checks or transferring funds from account to account.
- You also avoid the risk of “check bouncing” and the fees that follow.
Shortcoming:
- Although each bill has a unique serial number, it is nearly impossible to trace. (Who writes down the serial numbers of every single bill they come across, from one to one-hundred?) Because of this, people who can’t steal credit/debit cards or checkbooks will steal cash. .
- Cash also takes up more “room”, making it easier to notice. For example, a wallet that contains $100 will be considered “fat” in all $1 bills, and will certainly look like it contains more than $100.
- Unless you request, and save a receipt for each purchase, there will be no way to prove that you did or did not buy, buy, or pay for something while automatically using plastic. Keeps a record of every purchase made. Be smart, save and file cash receipts on big purchases and monthly payments.
- Tracking a money order (compared to a check) is very difficult, if not impossible. Because of this, money orders were a favorite form of payment for scam artists who do their dirty work on the Internet, such as the Nigerian (419) e-mail scam.
When is cash the ideal option?
- When paying in full for large purchases. Most companies will offer a discount for payments made in cash and/or in full. just ask!
- When buying at garage or estate sales, purchasing consignments on Craigslist or eBay, or through a local buy/sell newspaper such as Greensheet, as most citizens do not have credit card processing equipment. Most people will not accept a personal check from a stranger, aware of the possibility that the check may bounce, be fraudulent or stolen. Sellers can actually find themselves in legal trouble for accepting fraudulent or stolen checks, even when they didn’t know it wasn’t valid.
- If you use soda and vending machines a lot. Most only accept one dollar bills and coins. Those who use them frequently at school or work may find it handy to carry a few bucks in cash.
- People with financial problems may want to try using cash as their primary form of payment because it’s easier to see where your money goes, what you spend too much on, and what you need to cut it completely out of your budget. Should be considered as you can literally see your cash crunch.
- If your children are of school age, a good way to directly teach them about finances, budgeting, savings, work/employment and the consequences of being irresponsible with money is by giving them a small cash allowance.
payment method: Credit Card / Debit Card.
Debit cards allow you to use money you have (deposited) in your bank, while credit cards are charged on a line of credit or money that you don’t currently have, but have to pay back over a specified period of time. promises. Pros:
- A great way to build credit.
- Ability to make large purchases in one transaction, and without the paperwork of layaway and payment plans.
- Many cards allow you to make purchases as credit or debit, giving you a choice.
- Consolidates all your payments into one monthly bill instead of multiple bills paying monthly from each individual retailer.
- You can get your cash quickly by using an ATM machine instead of going inside the bank and waiting in line.
- You don’t have to carry cash for fear of losing it.
- If your card is lost or stolen, you can report it and will not be liable for all transactions.
- Your transactions are automatically recorded.
- The easiest way to shop online, the only form of payment accepted at some webstores.
- If the money is paid back in the “grace period”, then there is nothing to worry about.
Shortcoming:
- Many people feel as if they have unlimited money in hand with a credit card, thus spending more money than they would otherwise.
- As far as convenience goes, they’re pretty good, with most banks normally open from 9:00 a.m. to 5:00 p.m. or somewhere around that, and are closed for federal holidays. On weekends, they are either closed completely or have limited hours. Credit and debit cards give you access to funds in situations where you would not be able to make withdrawals at a bank.
- Impulse buying is the biggest problem with credit cards.
- Negligence in payment and ignoring your bill will land you in big trouble. Late fees, interest charges and whatever other charges are a condition of your card can easily double the amount you originally spent.
- While you can improve your credit with one, you can easily damage or destroy it.
- Remember, credit card companies make many millions of dollars a year, and there’s a reason for that.
When is a credit/debit card an ideal option?
- When you want to build your credit.
- When you need to make purchases on credit and want to avoid getting a cash loan.
- You do a good portion of your shopping through the Internet.
- When you make frequent purchases at a certain location, they may keep your card number/PIN on file for faster transactions. Having a bank account to transfer money is more secure than a money order, there will be a report of what the money was transferred from and to which account and when it was transferred. If you have employees or someone else that you pay, this is a great option.
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