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Paying with Credit Cards versus Cash | @Ease

creditThe Advantage of Paying with Cash versus Credit Card

Most of us believe that having a credit card can be pretty great. It provides us with immediate access to money, even if we don’t have this money at the time of a purchase, or know we won’t have this money any time soon to pay it off. That’s why paying with plastic is so tempting but the reality of paying with plastic is not great! Credit Cards give you the sense of freedom and the required minimum monthly payment for most credit cards of $10.00/ month intensifies this feeling. Paying with cash, money that you actually have is the best way to go about saving money and staying on track with a budget.

Although the concept of credit cards is great, there are many downfalls to using credit cards for purchases. Here are the main downfalls of using most types of credit cards in Canada for everyday or large purchases:

You End Up Over-Shopping

It’s been found that most Canadians end up doing more damage when spending with plastic than compared to cash. Credit cards are so quick and convenient it is easy for it to become a dangerous trend for many of us. Credit cards are accepted virtually anywhere so this makes purchasing products easier than ever before. With Most retailers providing Online Shopping it makes shopping a mind numbing process. Online shopping is a great way for people to over spend on their credit card. They can do more damage in 30 minutes then they could do within a store as they are taking out the process of checking over the item in store. Most websites also add the feature of saving your credit card information to make purchasing faster the next time you shop.

You End Up Carrying a Negative Balance

When you are able to spend more than you earn, it’s easy to get caught in a cycle where you can keep spending when you can’t afford to pay it back. This is why it’s so easy to end up carrying a negative balance. Carrying a negative balance also means that you incur a lot of interest if your balance is not paid off on time each month. When incurring interest you are spending ‘extra’ money on the products you purchased.

You Over-Pay on Many Items

As discussed above, if your balance is not paid off on time each month, you end up incurring a lot of interest. This means that at the end up the day, you’re over-paying on a lot of the items you charge to your credit card. This ultimately goes against what anyone on a budget should do. People also tend to over spend on items when using a credit card because they become less concerned about the price of the item and become more concerned with the convenience of the purchase. By having the feeling of unlimited funds they tend to choose convenience over cost.

When it comes to paying bills, buying groceries, and setting yourself up for a budget that is achievable and sustainable, it’s best to pay with the cash you have, rather than buying on credit. Hoping you can pay that bill off once your pay cheque comes through is not a great way to handle your fiances.  It’s always best to live within your means.


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