Should You Use Credit, Debit Or Cash For Everyday Purchases? An Expert Weighs In

Written by Ann Brown
Credit, debit, or cash for everyday purchases? Which one you use and prefer depends on your personal habits and the situation. Image by Autumn Keiko

Carrying cash is becoming less and less of a habit for Americans, who find it easier to whip out credit cards or debit cards to pay for things.

In a 2017 survey of more than 2,000 Americans, U.S. Bank found that Americans aren’t carrying a lot of cash with them. “Overall, 50 percent of respondents said they carry cash with them less than half of the time they are out. When they do carry it, 76 percent say they keep less than $50 on hand and nearly half say they keep less than $20. About 46 percent say they use cash less than eight days each month and 5 percent say they never use it,” CNBC reported.

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So which is better to use? Credit, debit, or cash for everyday purchases? Expert Rod Griffin of Experian explained the pluses and minuses of each form of payment.

In an interview with CNBC Select, Griffin, Experian’s senior director of consumer education and advocacy, advised there are certain times when credit cards are best. “With all of their perks and rewards, using credit cards can be a financially sound decision. With credit, you can take advantage of some key benefits you don’t get with cash or debit cards,” he noted.

The downside, credit cards can be too easy to rely on and cause you to go into debt faster. “It’s a question of, ‘Are you using credit as an additional income source?’ or, ‘Are you using credit as a way to take advantage of other financial opportunities?’” Griffin said.

If using your credit card will result in points, then they might be the best option. According to CNBC Select, the PenFed Platinum Rewards Visa Signature Card is the top credit card with gas station rewards, offering the highest rewards rate at gas stations with 5X points per dollar spent. 

“If you’re using credit as a financial tool and not taking on debt, it can be a financially advantageous decision,” said Griffin.

You must make sure to pay off your credit balance in full each month so that you are not paying interest and other fees associated with credit cards. 

“I have known people that use a credit card for every purchase — one card — and they make every purchase every month using that credit card, and then turn around and pay it in full because they take advantage of points for airline miles,” Griffin said.

But he added the way you pay depends on you as an individual and how you want to spend money. 

“As credit card bills have become the biggest source of debt for millennials (beating out student loan debt), it is important to know what you can and can’t afford before making any purchase,” CNBC reported.

“I’ve always said that credit cards aren’t for everyone,” Griffin says. “It really does depend on your personality, the way that you manage money, your relationship with money and your ability to resist impulse buys.”

As far as debit cards, you always need to be aware of how much money you have in the bank as not to overdraft on your account, which can result in you paying high fees.

For many, when it comes to using debit cards over cash or credit, it is really just a convenience issue. “I actually personally will use a debit card,” Griffin says. “If I go out to eat, for example, we tend to use a debit card, my wife and I, because we see it as cash now and that’s our habit.”

Cash is best when you want to really keep track of where your money is going. “If you’re using cash in particular, real paper greenbacks, when your purse or wallet is empty you’re done, so you can limit your spending in that way,” Griffin said.

Keep in mind, each payment may call for a different type of payment method. 

“You may use cash for buying dinner, but use a credit card for bigger purchases just because it suits your budget and your financial style better,” Griffin pointed out.