With rising inflation and stagnant income growth, more consumers are turning to credit cards to make ends meet. At the same time, credit card debt is at an all-time high with more people choosing to use credit cards.
Experts say that paying with a credit card leads to higher fees and overspending but using cash or a debit card can help you save money and stay within your budget. Here’s when using cash is better than credit card.
Gas
When people fill up their cars with gas, they usually use a credit card. However, gas stations charge credit card users an additional fee, so it’s better to pay cash.
According to personal finance company NerdWallet, you can save an average of 5 to 10 cents per gallon and up to 40 cents per gallon by paying cash at the pump instead of using a credit card. That means you could save as little as 75 cents or as much as $6 on a 15-gallon tank of gas. It’s important to note that some gas stations charge fees for debit card payments as well.
Cash is also better for privacy reasons. There’s been a surge in card skimming fraud, where a device attached to a card reader steals cardholders’ personal information. Credit bureau FICO reported that 315,000 debit cards were compromised last year. That’s a 96% spike from 2022.
Tuition
When it comes to paying for college, it’s better to pay with cash or a debit card than a credit card. This is because the fees charged by colleges and universities for using a credit card outweigh any other benefits of a credit card.
According to GOBankingRates, 85% of colleges and universities nationwide accept credit card payments. They typically charge 2 to 3% of your payment, which is less than the cash back you would get from a credit card company. Considering the average late payment interest rate on credit cards is 24.92%, you would need to pay a lot of money in late fees if you miss a payment.
Grocery
Using a credit card for grocery shopping can easily lead to overspending. Experts say that using cash or a debit card can help you stay within your budget and avoid impulse buying.
Forbes recently conducted a study and found that people were twice more likely to impulse buy when using a credit card than paying with cash. Prioritizing and budgeting your purchases can also help you save more money, it added.
BY JAESUN SUH, HOONSIK WOO [suh.jaesun@koreadaily.com]
