When to Pay Cash and when to use a Credit Card

I use a credit card for EVERYTHING. However, it is usually my checking account card, so it comes straight out of my bank account. I have heard people say that you should always use cash because “it hurts more” and you will usually spend less, but I have not found this to be true. If you are Internet savvy you can easily link all of your accounts through something like Microsoft Money and keep track of exactly how much you have and how much you’ve spent.

To me, being able to see exactly how much I have spent and on what I spent my money on, causes my budgeting to be much more effective. For example, by using a credit card and Microsoft Money; I now know that I spent 8% more on dining out this month than I did last month and I know that I spent 3% less on gas. And knowing this has directly resulted in the Microsoft Money statement that says “Your net worth has increased 2% over the last 3 months.”

The truth is, if you are responsible and pay them regularly, credit cards can help you save money, buy a house, get a new car, etc. . . But, if you are not responsible, they can literally destroy your financial future and make no mistake; this is what the bank is counting on when they give you that free t-shirt for signing up at 0.0%. They are not your friend. So if are not good with finances and you can’t trust yourself; put the pen down and slowly back away from the application.