This is a million dollar question without any doubt. Financial professionals can solve the matters involving huge sums of money, develop long-term plans for corporations and make decisions strategically. However, when it comes to answering a simple question of choosing between cash or credit, they are usually unable to decide. The truth is that there is no definite answer to choosing between cash or credit scheme for you. It all depends on your personal circumstances.
Going for a cash or credit transaction also depends on your budget, credit ratings, financial standing, annual income and many other factors. Also, you should decide keeping the specific transactions in mind. Interest rate and need for urgency is one of the strongest things which will help you in determining the right choice for you. Other than this, you should also consider many different things before you choose between cash or credit cards for a transaction.
Consider the Urgency of Your Transaction
If you need to buy something on an urgent basis and you don’t have money for that, you should definitely go for a credit card purchase. As compared to a regular loan from bank, buying on a credit card can lower your total costs. Buying something on credit card can also give you sufficient time to make the repayments. If you don’t have the cash amount to buy something you need on an urgent basis, going for a credit card transaction is the best option.
Calculate Interest Rates
This is the second most important consideration. Before going for a transaction, make sure you compute interest rates properly. It is very important to make an estimate of the total cost you will incur after calculating the interest rates. It is much better to pay in cash than on elevated rates for interest which will make a heavy difference to overall amount. Depending on your circumstances, make sure you never end up paying more than you are required.
Always Go For Cash If You Want To Follow a Budget
If you want to strictly follow a budget, purchasing on credit card is the worst choice. It will become difficult for you to stay within the limits of your budget if you regularly use your credit cards. Other than this, credit involvement in your transactions will also affect your limits in a bad way. To stick to a budget, make sure you always pay in cash.
Consider the Amount of Money Involved
If you are making a huge purchase, it is essential to follow a secure method. Paying in cash is never a safe option. You should not be carrying large sums of money with you. There is always a risk of natural disaster, theft and robbery involved. Paying through credit card is the best option when it comes to larger amounts. There are fewer hazards and dangers involved. However, when dealing in credit transactions, make sure you are aware of fraudulent scams and credit card duplicity.
Whether you should go for credit card or cash transactions depend on these factors. Apart from this, there are also many other contributing points that will help you in deciding the right option for you.