Personal Finance and Investing

We all want to watch our pennies and avoid overspending in today’s economy; and this is all the more evident when it comes to holiday shopping. Because of this, we may be inclined to keep the credit cards at home and use cash instead. But is this the best solution?

Perhaps not. Although the concept of only purchasing what you can afford to pay off within a month or two is an excellent idea, it may not be beneficial to pay for your holiday purchases with cash, and here’s why:

• Cash can be stolen – Yes, so can credit cards, but the biggest difference is that the answer to a stolen credit card is a simple phone call to your creditor to have the account frozen and the card replaced in a matter of days. Once cash is stolen, however, you can all but forget having it returned to you. In other words, a wallet full of cash may just be too risky.
• Cash can’t provide you with proof of purchase – If you lose a receipt and pay cash for the item, there is no evidence that you purchased it in the first place. However, a credit card statement is proof of your purchase, which may provide you with an extra insurance policy in case you lose a receipt. In addition, you may also have rights as a cardholder if you have a dispute with the retailer.
• Cash can’t offer you rewards – Many of today’s credit cards offer great rewards for doing what we do anyway: shop! So why not take advantage of these rewards programs and use your credit card to do your holiday shopping?
• Cash is often not convenient – Let’s face it: fumbling around in our purses and wallets for cash and loose change can be a bit of an inconvenience. A credit card transaction is therefore generally smoother and more convenient than a cash or check transaction.
• You can’t use cash online – There are many, great online deals to be had this holiday season, so it may pay to take advantage of them. However, you must have a credit card to complete most online transactions.

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