Cash or Credit Card? —Discover Why Cash Wins

1. What research has been done?

1.1. Researchers at MIT found that our willingness to pay can be increased by as much as 100% when we have our credit card.

1.1.1. Your bank balance is not a factor

2. It’s the time gap

2.1. When we buy things with cash, we know our cash balance immediately and whether it was a rip-off or a bargain.

2.2. With the credit card, the time gap puts off the evil day

2.2.1. We will discover a somewhat painful experience when we get our credit card statement at the end of the month.

2.3. Narrow the time gap by writing down what you have spent in a notebook or a spreadsheet.

2.3.1. This is far too much work though

3. Reward points are a trap

3.1. The airline miles are deceptive. You might need 50,000 airline miles to get a return ticket trip.

3.2. The only problem with reward points is that we always miss the deadline

4. The accrued interest trap

4.1. If you cannot pay your credit card balance fully at the end of the month, interest starts to accrue on those purchases

4.2. Plus the interest charges mount up the more you spend.

4.3. Americans are now $1 trillion in credit card debt according to the Federal Reserve.

5. The theft myth

5.1. You can get cash back in the case of theft of your card and that you are protected.

5.2. But you have to consider the identity theft

5.3. It's a pain to get the card cancelled

5.4. If you only carry cash, you just cry and get over it.

6. What about booking to travel?

6.1. It's better to use a debit card

6.2. There is very little extra charge and it is just as secure.

6.3. You can pay cash for all your meals and purchasing souvenirs

6.4. It helps you to keep a better check on your overall spend.

7. What about paying with a credit card at the supermarket?

7.1. Not having to remember to carry enough cash can be a pain

7.2. Dealing with notes and fumbling with change can be awkward, as well.

7.3. But a bit of organization beforehand can work wonders.

8. Conclusion

8.1. It's better to use cash as you can budget better and be in more control of your finances.