Cash isn’t always better than credit. It might sound ridiculous to some people because they only heard about the negative aspects of using credit card. But for responsible card users who pay on time and maximise the benefits of their credit cards – credit card trumps cash.
Of course, you have to use your credit card smartly in order to gain from the cash-beating benefits. Otherwise – the only thing that will take a beating will be your bank account.
Here are 3 great reasons why credit card trumps cash:
#1 Credit Cards Are More Convenient
If you’ve seen the funny credit card commercial about the assembly line of customers shuffling through a café while tapping their cards to pay “EZ-Link” style – you know where I’m going.
The fact that credit card makes it incredibly easy for you to get in and out of a store fast without having to fumble with cash and coins. And if you’ve ever been a grocery store in Singapore, you know now irritating it is to wait in line while someone counts their coins to pay for the bill.
Here are some other reasons why credit card is convenient:
- Online Shopping: The vast majority of online retailers accept credit cards for payment. While it’s true that you can use “cash” in the form of your debit card, you won’t benefit from tip credit card rewards (see tip #3).
- Deposits: Most hotels, airlines, and car rental companies, especially overseas, won’t accept debit cards – but they will take credit cards.
- Tracking: Credit card enables you to keep track of your transactions through online accounts, which makes it easier to track and manage your expenses.
- Emergencies: If you need to make an emergency purchase, you can use credit card as a “free” loan – provided you pay off the purchase in full before the billing cycle.
#2 Credit Card is Safer Overseas
Don’t get the wrong idea. Credit card can be quite dangerous if you let yourself get too carried away with your spending. However, credit card is much safer compared to cash when it comes to one of Singaporeans’ favourite pastimes – travel.
Unfortunately, some travellers rely too much on cash when travelling overseas. That wouldn’t be such a big deal – if crime didn’t exist. Unfortunately, it does. And when you lose your cash overseas due to theft – it’s usually gone for good.
When it comes to losing a credit card due to theft, it’s actually safer because:
- You can cancel a credit card: If your credit card gets stolen, you can cancel your card immediately and have them replaced, unlike cash.
- You can dispute purchases: You can dispute fraudulent purchases made with your stolen credit and/or debit card. However, you’ll still need to pay a dispute fee (usually $5 to $15 dollars) and a liability fee of $100. Filing a dispute is painful, but at least you can get the stolen amount back.
The only downside to a credit card is that you’ll need to pay a foreign transaction fee of up to 3% on top of the exchange rate. But then again, it might be cheaper than the exchange rate offered by some dodgy money-changers at your destination.
#3 Credit Card Offers More Rewards
How many rewards can you get from using cash to pay for something, other than being happy about your purchase? Let me answer that for you – none. But if you use credit on the other hand, you can benefit from credit card rewards such as air miles, discounts and rebates.
Here are some of the most common credit card rewards you can get:
- Frequent flyer miles: Depending on your credit card’s air miles programme, you can easily earn up to 4x air miles for every S$1 you spend. (Tip: Here’s how you can maximise the value of your KrisFlyer Miles).
- Travel discounts: A good travel credit card will help you accumulate air miles and earn discounts on flight and hotel bookings while offering FREE travel insurance. (Tip: Check out which 3 travel credit cards every serious traveller needs).
- Petrol discounts: Credit cards with petrol discounts can easily save you 14% to 19% on fuel purchased from selected stations.
- Shopping rewards/discounts: Credit cards with shopping rewards and discounts of up to 40% at your favourite retail shops. (Tip: Check out our article on the 3 rewards credit card worth having).
- Entertainment rewards/discounts: Dining and socialising in Singapore isn’t cheap, but having a good entertainment rewards/discount credit card can make it much more affordable. (Tip: Check out our article on the 3 entertainment credit cards worth having).
Don’t get me wrong – using cash over credit is still recommended when it comes to life’s major purchases. After all, if you don’t have the cash on hand to buy something, you shouldn’t be making that purchase with a credit card anyway.
But if you use your credit card responsibly – you’ll enjoy the benefits of credit card.
For more financial tips and tricks to optimise your financial lifestyle, visit imoney.sg and learn all the best moves to make with your money.
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