Cash vs. Credit Card: Pros and Cons

Updated on September 16, 2020

Truly, cash is king.

But thanks to credit cards, you now don’t need to have money in your wallet to make a purchase.

While some people prefer the control in spending that cash offers, others would rather use a credit card due to its convenience. Businesses also divide into those who work in B2C sales, cinema theaters, for example, and need to count a lot of cash using special equipment like a cash counter machine, and those who use primarily money transfers in B2B sales. 

Whether you prefer cash or credit cards, weighing the advantages and disadvantages of these two forms of payments can help you make a more informed choice.


It’s hard to find an establishment that won’t accept cash as a form of payment.  In fact, many small businesses like your neighborhood corner shop or restaurant will take cash payments only.

Unfortunately, with the outbreak of coronavirus, many people are having second thoughts when it comes to the use of cash. This is despite there being scientific evidence that cash doesn’t transmit COVID-19.

To tackle this challenge, most banks in China and South Korea have begun sterilizing their banknotes. Retailers are also taking precautions by encouraging their tellers to wear disposable gloves while handling cash. Most businesses also disinfect frequently touched objects such as shopping carts, point of sales, and cash counting machines to slow the spread of the virus. Other businesses are encouraging their customers to make cashless payments even though this can burden those who prefer to use cash for payment.

However, although businesses and consumers are turning to online payments, the use of cash as a payment method is still prevalent, which brings us to the pros and cons of using cash as a form of payment.

Pros of Cash

The biggest advantage of cash payment is that it helps you avoid overspending. This is because you’re limited to spend the amount of money in your wallet.

Other notable advantages of this payment option include:

  • Convenience as very rarely will businesses say no to cash.
  • No additional expenses such as credit card fees and interest when you choose cash.
  • Paying cash also saves businesses money, and you may benefit by getting a cash discount.

Cons of Cash

You can easily lose your cash, and since there is no way to track it, you may never find it.

Other disadvantages of cash as a form of payment include:

  • Cash payment is limited by distance as it only works when you’re with the seller.
  • Cash limits your preparedness for emergencies as you can only use what you have.
  • Some businesses during this COVID-19 pandemic aren’t accepting cash, which can limit your purchasing power.

Credit Cards

Many people stay away from credit cards because of the possibility of getting into debt. But this form of payment has its advantages, some of which are highlighted below.

Credit card pros

  • Credit cards are reliable as you don’t have to walk around with large amounts of cash, and you can also buy items on credit and pay for them later.
  • If you lose your credit card, it’s possible to get a replacement. A credit card also offers fraud protection through the Fair Credit Billing Act.
  • With a credit card, you can purchase or reserve items online and over the phone.
  • Many credit card companies offer cash rewards if you make frequent purchases.
  • If you use your credit card the right way, you will build your credit score, which is often considered when you need to buy a car, a home, or rent a new apartment.

Credit card cons

Using a credit card comes with a variety of challenges. For instance, late payment of your credit card balance can lead to credit card debt, which can be damaging to your financial future.

Other disadvantages include:

  • Credit cards are more prone to identity theft.
  • High interest that credit card companies charge can make purchases extremely expensive.
  • High credit card balances and late payments can lead to a lifetime of debt.

Each of these types of payments has its pros and cons. A credit card may be a reliable form of payment, but paying in cash may keep you from debt. Thus, it would help to weigh your options before you decide on which payment option to use.

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