Cash, Credit or Debit?

Image by Michal Jarmoluk from Pixabay

Hi guys! I hope you’re having a great week so far. We’ve been spending a lot of time talking about building a good foundation for financial freedom. Today, I wanted to switch gears a little bit and talk about the actual act of spending. We all know the best way to be debt-free is not to get into debt in the first place, but is that really possible? Is it better to only use cash? For everything? Would debit cards be better? Are credit cards just a gateway to destruction? Let me tell you how I handle each one.


Now, I have to talk about cash from two different perspectives – how I use it today and how I used it pre-pandemic. I don’t usually carry much cash. Prior to the pandemic, I would use cash to pay for gas, take-out if we want a treat on the weekends, and small grocery trips for the most part. When I first started following a budget, I used cash for almost all of my expenses. I wrote a check to give tithe and offering to my church, paid utility bills with online bill pay from my bank, and used cash for everything else. I set the cash aside weekly, and when it ran out, that was it. I waited until the next week to ‘reload’. It was helpful for me to literally see where my money was going which also made it easier for me to stick to my budget. Today, I still don’t carry much cash, but it’s even less than before the pandemic and for a few reasons. One being that some of the stores in my area have switched to card-only payment to reduce touch points and potential opportunities for viral transmission. Most others still take cash but only if you can pay with exact change. The bigger reason for me though is that I’ve become disciplined enough to use my credit card regularly without getting into debt and take advantage of the cash back rewards. More on that in a minute…

Debit Card

My method for using my debit card has been the same both before the pandemic began and today. Quite simply, I barely use it at all. I reserve my debit card mainly for ATM withdrawals, for specific stores and restaurants when my bank offers cash back rewards (a few times a year), and when I give my tithe. There was a time a few years ago when I exclusively used my debit card for just about everything – sort of graduated from cash only to debit only if you want to think about it that way. It did make tracking expenses easy since my bank did all of that for me. However, I could never really get comfortable with a big ‘what if’. What if my card was compromised in some way, and the money in my account was stolen? I know that there are protections in place that would get me my money back eventually. But eventually is what I couldn’t get comfortable with. I’ve experienced a compromise with a credit card before, and the charge was reversed the same day while an investigation was initiated to find out what happened. A same-day reversal sounds much better than waiting up to 90 days to get my money back – at least I think it does.

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Credit Card

A credit card is my most frequently used method of payment these days. I don’t have any issues with wondering if a store will be taking it or not due to the pandemic, and I also get cash back with every purchase. I don’t pay my tithe with a credit card because I don’t want to get a bonus or reward from my giving (just a personal choice), but I do use it for almost everything else – internet, groceries, gas, clothing, and of course for online shopping. The rule of thumb for usage though is that I ONLY use my credit card if the money is already in my account to pay for whatever I want to buy. If I wouldn’t be able to pay for it in cash, I don’t get it. Instead, I wait and save up for whatever it is or work it into the budget the next time I get paid. Yep! I go without in order to avoid generating debt, and it works. I pay my credit card off every week. So, I never pay any interest or late fees, and I earn cash back with every purchase that I save to use as extra spending money when I’m able to take a vacation or to get a special treat at the end of the year. The last few years though, I’ve just been letting it build up. I also really like the fraud protection that comes with a credit card for this reason: If something ever does happen, it’s technically not my money that the identity thief has used. It’s the credit company’s money. If I do everything that I have to do to rectify the situation, my actual money should never get touched, and I’m not potentially waiting several months to get my money back into my account.

So, what’s the best method of payment to use? The short answer is: it depends. I use different methods for different reasons, and they all have their purpose. I work each of them differently based on what I want to do. I have the control. That’s really the beauty of building a solid financial foundation and taking authority over your finances. YOU are in control, and YOU are responsible for what happens. Cash, credit and debit are just tools. They do what you tell them to do. You don’t blame a hammer for missing a nail. It’s not the hammer’s fault. It’s just a tool. It falls where you swing it. You just need good aim. Same with these methods of using money. They’re just tools. You can use any or all of these methods of payment and still stay out of debt and get the outcome you want. You just need good aim. If you don’t know how to use them without getting into financial trouble, learn. Ask questions, read literature, sign up for a class or program if you have to, and learn. When you know better, you do better. You’ll get to where you want to be with anything, not just your finances, if you keep that in mind.

How do you spend your money? Do you do anything differently from what I do? Did you learn anything new? Let’s chat about it in the comments.

Until next time!