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Pros and Cons of Cash vs. Card
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Student Contributor
Posted December 17, 2019
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Years ago, my grandma would come home on pay day, lay out all her money that she made and divide it by envelopes. She allocated a certain amount for groceries, rent, heat, and savings, then locked the envelopes up in her desk and only took them out when it was time to spend. This was in Eastern Europe in the 1970s and times have changed as well as payment options.

There is a lot that goes into being smart with your finances, but it all comes down to spending. Here are a few pros and cons of different ways to pay to help you decide which the best is for you.
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Management- With cash it’s very difficult to spend what you don’t have. It’s also much easier to manage spending by leaving the house with only the amount you intend on spending, and not a penny more.


Security- It is much harder to keep track of spending when it comes to cash. Sure, you could keep every single receipt, but unlike cards, it is not recorded electronically for you. If your wallet gets lost or stolen, there is no way to get back the cash that was in there.

Future- With cash there is no credit history being built because your spending is not being recorded. Additionally, the cash that is not being used and just sitting in your safe at home is not earning interest like it would be in a financial institution. Consider keeping cash in an interest bearing savings account. Though it might be a small percentage, interest builds up over time, and it is still free money.
Credit card
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Security- A credit card is very secure. If it gets lost or stolen, you can report it to your financial institution right away to cancel it and fight any fraudulent charges it may have.

Future- A credit card is a great way to build your credit and a good financial future, but only if you use it responsibly. Make sure you pay off your credit card every month to avoid interest and extra fees!


Management- A credit card is the easiest way to spend money you don’t have. If you don’t pay attention to spending, you could rack up fees and interest that puts you in a financially dangerous situation. You have to be very careful with a credit card. It is also important to keep a close eye on your credit card bill. If there are charges you don’t recognize, someone could have access to your credit card number.
Debit card
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Security- A debit card is typically more secure than cash. It functions a lot like a credit card, but the main difference is that a debit card is linked directly to your checking account. If you find that your debit card has been lost or stolen, report it to your financial institution immediately. One of the ways you can use your debit card is with a PIN. Make sure your PIN is something you can remember but not easy for others to figure out. (Avoid using the same PIN for all your cards.)

Management- Depending on the setting you have on your debit card, most don’t let you spend money that isn’t in your account. You could set it up in different ways where in the event you don’t have enough money in your checking account, you could have it transfer money from your savings. This method is called overdrafting and note that it may have a fee associated with it. Though this fee is unpleasant, it is much lower than what a credit card interest payment has the potential to be.


Future- A debit card helps you manage and practice using a card, but unfortunately does not build credit.
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