You will find advantages and disadvantages to each method of payment. Some people prefer to pay cash. Others like the convenience of a debit card as well as the rewards and fraud protection that the credit card can offer.
Ideally, you will use each of these three types of payments where the situation will offer you the most benefits. You will limit their disadvantages while taking advantage of their positive points.
So when should you use money, credit or debit?
“Money is king” when your budget is tight.
With cash, you can easily calculate each penny in your possession. Some people use envelopes to manage their different expenses. This forces them to stick to their budget because once all the money has been set aside, they have to wait until the next month to spend again. Some people do not find the money convenient and safe because they have no way to recover a stolen or lost sum. However, people on a tight budget consider this form of payment the best.
When you buy, nothing beats the credit card to offer you additional protection against fraud.
You must use a credit card and not a debit card when shopping online because it offers you better protection. Companies usually have a fraud department that investigates claims. At this point, they freeze all payments until the problem is resolved. You will not pay anything if you see a fraud. When using debit cards, cash is withdrawn immediately upon purchase. You can still claim as a result of fraud, but you will only recover your money at the end of the investigation.
If you do not want to go into debt, consider the debit card as the best option.
You do not want to increase your debt, use the debit card. It offers you the same benefits as the credit card, but because the money is directly withdrawn from your account, you do not incur any debt. So, if you owe a balance on your credit card, you will consider the debit card as the ideal option for balancing “convenience and budget management”.
Do other solutions exist?
These three options remain the most common when it comes to daily expenses, but other means of payment exist. For example, you can apply for a personal loan online instead of a credit card. Easy to obtain, it does not usually require a complete credit check. The process only takes a few hours. Once approved, deposit the money into your bank account. You can then withdraw it from an ATM and use the money or the debit card.
If you manage to manage all these payment methods together, you will assign the payment to each situation.