Knowing which payment method to use can be difficult. These tips can help you determine the option that best suits your needs.
With all the options for making purchases and payments, it can be difficult to know which payment method to choose. Is there really a "best" way to pay for things? Should some methods be avoided altogether? If you've been pondering these questions, the following should help you determine which payment methods best suit your needs.
When deciding when to pay by cash, debit or credit, consider your spending habits (carrying cash can help you manage daily spending) and how well you keep track of your finances (paying with debit or credit gives you easy access to a record of your purchases). Contrary to popular belief, it is not always best to pay with cash. Debit and credit cards can be a better payment method in certain situations. You might be looking to build your credit score, you might want to keep better track of your weekly/monthly spending or you might be in a situation where carrying cash isn't safe.
Here are some tips to help you decide which payment method is best for you:
Paying by credit card:
- Responsible use of a credit card can be a safe and easy way to build up your credit rating.
- If you choose to make a purchase with a credit card, you can reduce the amount of interest you pay by paying more than your minimum payment each month. Or, if you are able, you can avoid interest on purchases altogether by paying your bill in full each month.
- Many credit cards come bundled with rewards programs that allow you to earn points that are redeemable for things like travel and merchandise. There are also cash-back credit card programs that allow you to earn a certain percentage of money back for each purchase you make with the card. The ability to earn points or cash back on purchases may make using your credit card the right choice for some transactions.
- Some credit cards offer a certain amount of protection on purchases. For example, some credit cards provide protection if you buy merchandise that turns out to be defective. Many credit cards also come with fraud liability protection, meaning the card provider won't hold you responsible for fraudulent charges on your card as long as you report them promptly.
Time to take action: You are the one who makes the decision whether cash, debit or credit (or a combination) best suits your lifestyle and habits. Carefully consider the benefits of each payment method before making a purchase. Deciding your payment methods ahead of time can help you keep better track of your money, and you won't be stumped at the checkout line when the cashier asks "cash," "debit" or "credit."