Shopping? Cash or Card? Which is better?
Best answer… It depends.
Ah, the season of shopping is upon us, along with the age-old budget debate: is it better to shop with cash or with a card? The pandemic and recent supply chain issues, make this year much different than past holiday shopping years. Many of us are shopping earlier and online. Cash doesn’t exactly work in your Amazon cart. So, how do you determine the best way to spend? When considering the best way to shop this season, here are four things to keep in mind:
1. Budget. Yes, it’s always the first place to start – and the hardest to stick with.
We know we want to stay on budget, but it can be tempting to go overboard with the promise of Christmas Eve feasts and Christmas morning magic; especially when using a card.
Cash budgets are easy to manage. A popular strategy is to use “cash envelopes” with the name of what or who you are shopping for written on the front. You can easily see how much you have to spend and once it’s gone, it’s gone. The downfalls of this method are the risks of losing the cash or having it stolen. If you are dealing with large budgets, this can also make you a target of theft if the money is visible to others while you shop. Dealing with breaking bills, counting change (and insuring you are getting the correct change) can add an extra layer of stress at an already busy time of year.
With a little planning and discipline, you can replicate the cash method using the Notes app on your smart phone. Simple pen and paper will also do. Write the name of what or who you are shopping for and the amount you are budgeting for each, just like you would in a cash envelope. When you make a purchase, add a line beneath the name with what you bought and the amount you spent. You can subtract it from the budget to know what you have left. This method allows you the visual benefit of using cash without the risk. As an added bonus, you will remember what you bought after everything is wrapped so you don’t have the last-minute worries you forgot someone or something. Better yet, you can do all of this using a Debit Card rather than Credit Card, adding another layer of accountability to your budget and decreasing the overspending impulse.
2. Safety. As Maslow’s Hierarchy of Needs defines, the need for safety is right after our basic physiological needs of food and shelter.
Carrying cash isn’t as safe as carrying a card. But there are other safety concerns to keep in mind –protecting your money and your identity. Credit and debit cards are encrypted and require a CSV number or chip and PIN. These safeguards are in place to protect your card information and prevent scammers from stealing and using your card for unauthorized purchases.
It’s important to protect you card and personal information so you don’t inadvertently enter or give it away. Always check to verify any site you are shopping is safe. Look at the URL and confirm it begins with “https” instead of “http”. The “s” means the site is secured using a TLS/SSL certificate, which secures your data as it is passed from your browser to the website’s server. You can also look to make sure it has the closed lock icon. Other important ways to protect yourself are to keep your information secure and private, keep you contact information current, and check your account often. Set up account alerts to be notified of when and where your card is used and use card controls to turn your cards on and off.
You are protected from unauthorized purchases and fraud when using a credit card. The Fair Credit Billing Act (FCBA) limits your liability to no more than $50, regardless of the amount of fraudulent charges. If you report a credit card lost before it’s used, you are not liable for any unauthorized charges. Debit cards also have fraud protection, but these transactions fall under the Electronic Funds Transfer Act (EFTA) and the guaranteed coverage depends on when the card is reported lost. You are not liable for any unauthorized charges if reported before any unauthorized charges, up to $50 if reported within 2 days of the loss, the first $500 if more than 2 days of the loss and all fraudulent charges if more than 60 days after the statement is sent. This conditional coverage is why consumers are often encouraged to use credit rather than debit cards for online or large purchases.
3. Rewards and benefits. Many credit cards and Global’s debit card offer rewards, discounts and other benefits. Cash can’t do that.
While some small businesses may offer a discount for using cash, many people have discovered the value of the rewards associated with using their credit or debit card. Cash back, points and miles, additional discounts, benefits and exclusive events or experiences are all popular added value. Be sure to research your card’s benefits and maximize your perks. Understand the rewards and redemption process so you can stretch your rewards even more.
4. Convenience. Let’s be honest, convenience is king. Especially during the busiest time of the year.
Shopping with a card is the most convenient way to get in and out and on to the next stop. It’s also a great way to keep track of what you have spent. You can review your debit or credit card purchases on eBranch without having to wait for a statement at the end of the month. Almost all retailers accept cards and now, even micro-businesses and individuals can accept cards with Square or Paypal and apps like Venmo.
The old adage, ‘Time is Money’ is definitely true this time of year and the added convenience of shopping online gives you a little more time to spend with the ones who make the season special and the holidays our favorite time of year.