Whether you’re a Dave Ramsay junkie or trying to learn from some big mistakes in your spending habits, it’s no secret that using credit cards encourages more spending. But I have to assume that you have some clue about how important a budget is to curbing your spending before reading this. Both credit cards and cash have major benefits and drawbacks.
If you have a problem with over spending, deciding between cash only or credit/debit card exclusive systems is like trying to stick a Band-Aid on a gushing artery. You can’t renovate what you don’t own–so get a grip on a budget first. Once you’re set with monthly expenditures, take a close look at your credit car bills and cash spending. Above all: to thine own self be true. Know your natural inclinations to spending and adjust to reduce it.
Once you’re ready to take a stand, consider the following:
The Pros to Cash Only:
Cash is finite. Your credit card limit is too, but assuming an outrageous spending limit will only incur huge finance charges. Once you run out of dough for the month, you’re done. This means no furtive, late-night dashes to the ATM. If your budget is up for the month, train yourself to not buy anything else. Just as with starting exercise, you’ll have some soreness at first but the repetition and strength of habit will make it easier in the future.
Cash is accepted everywhere. Our card of choice, American Express, is not. Plus the swipe machines go down occasionally and you won’t have an option then either.
Avoid late fees. Even if you pay off your credit card bill at the end of the month, quirky things happen. Bills don’t arrive on time or get lost. If the unexpected can happen, it will. Credit card companies thrive off late fees and even one late payment can mess with your interest fees. When you pay with cash, the transaction is completed immediately.
Cash is convenient for random expenditures like tips and split bills at restaurants. No more worries about having an extra dollar or two on hand for cash only needs.
Source and Keep reading at: The Go Frugal Blog