How to Use Cash, Credit Cards or Debit Cards to Your Advantage

By | May 31, 2021

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Are you worried by all this talk about using credit cards and the potential harm of mounting debts they can cause?
According to CNBC, an average American household with credit card debt owes $16,883.

You may have read about the cash envelope system and how effective it is to help you control your spending.

But using cash all the time?

Now, you may be torn between using cash or your credit card.

And what about a debit card?(Find out more about debit cards here.)

By the end of this post, you’ll gain the knowledge and confidence to know how and when to use these different ways to pay for your purchases, and come out the winner.

How and when do you use cash?

Cash is the physical currency you hold in your hand, or a cash equivalent like a direct online payment.

Here are instances when you’d use cash to your advantage:

-Some small businesses like eateries charge a fee if you use a credit card. So, use cash as you’ll save money by avoiding this fee.

-Certain recurring payments e.g. power bills, also charge fees for credit card payments. Save money by arranging a regular direct debit from your bank account instead.

-When you have cold cash in hand, you can often negotiate a better deal when making a purchase. Some examples:

-A friend negotiated a lower fee from a carpet cleaning company as she paid for the service in cash.

-I know of a college student who saved on her car purchase when she used cash. She actually drove the car away right after paying for it with cash.

-For purchases like food and beverages, pay with cold cash.

This often works well to discourage you from unnecessary spending. So you save.

When I make cash payments, I become reluctant to spend more. Learn more about the cash envelope system and how to use it well to benefit your finances.

-Make a small online payment for an accommodation deposit if you are wary of how your credit card information might be used.

Once a motel owner tried to deduct one night’s payment from my credit card without my knowledge. Their employee had taken my cancellation call, but somehow neglected to record this information.

Luckily, they failed to deduct any money as my card happened to be retained by an automated cash machine (ATM) just a few days before. Phew! I found out only when they emailed to ask for payment.

Related posts:

How to pay off credit card debts in 8 steps

How to know which credit cards suit you?

How to Transform a Super Spender into a Super Saver For Good

11 Easy Ways to Save Hundreds on Motoring Costs

How and when do you use your credit card?

Secrets to using cash, credit cards,debit cards

When you use a credit card, you are not using your own money to pay for things.

You are borrowing money from your bank – the bank pays for your purchases initially. Of course, you must pay back the amount you borrowed from the bank at a later specified date.

If you don’t pay your credit card bill in full, then no matter what amount you owe, the bank is going to charge you a hefty interest rate month after month.

Usually the credit card statement always states the minimum amount you have to pay, and by when.

You have to be very careful though, to pay the FULL amount by the due date, or the hefty interest rate will kick in.

If credit cards are so ‘dangerous’ to our finances, why use them in the first place?

Paying off the credit card bill totally means you enjoy a period of interest-free use of the bank’s money. How’s that?

Another great advantage of credit cards is their safety – they can be reported lost or stolen, and are quite easily replaced. However, once cash is lost or stolen, it’s gone forever 🙁

There’re other benefits to owning a credit card. Some credit cards offer free travel insurance coverage when you pay for airfares, accommodation or other travel related expenses.

So there’s peace of mind and you don’t have to fork out extra money for travel insurance 🙂

Some credit cards have a price protection facility.

This means that if you happen to find a cheaper price for the same item you’ve bought within a certain period, you’ll get a refund of the difference in price from the credit card company 🙂

Certain credit cards such as the Citi Double Cash Card (NO annual fee) give you a free extra warranty protection for two years, if you pay by credit card for qualifying electronic products like TVs and computers. What a great deal!

What about store credit cards?

Some stores offer 0% interest credit cards.

You pay no interest at all on purchases from the issuing store, if you pay off the full amount within the stipulated period, usually a few months.

Sounds good! Be careful though – you must make sure you pay off completely, or you’ll risk getting charged the interest on the FULL purchase amount.

Some hotels offer free credit cards that qualify you for a free night’s stay once a year. What a great deal! Look into credit cards like the Wyndham Rewards® Visa® Card.

So you see, when you use your credit card prudently, you’ll get rewards and benefits.

Find out more about credit card basics in this comprehensive guide that includes useful information such as what a credit card balance is, how interest rates work, what a minimum payment means as well as different types of credit cards and their fees.

How and when do you use your debit card?

Before going into that, it’s good to know what a debit card is and how it is different from a credit card. At first glance, they look similar, but the way they work is very different.

A debit card is like having cash in your hand. You use a debit card to pay for things with the money you already have in your checking account.

You usually apply for a debit card from your bank, and depending on your bank, you may or may not need to pay a fee to use it.

A debit card is best used for buying items in stores and you can even get cash out of your checking account.

For more information on how to use your debit card, have a look at’s website.

If debit cards can help curb your spending, should you use a debit card for online purchases then?

If you need to buy items online, it’s actually better to use your credit card. Why?

A credit card purchase is safer as it offers better protection against potential fraud. Should there be any misunderstandings, they’ll be relatively easier to settle. Moreover, your whole checking account is at risk if your debit card number is hacked.

So what about the safeguards of credit cards for online purchases?

Using credit cards to make online purchases means you are protected by the Truth in Lending Act – if you report your card missing before it has been used, you won’t be held responsible if it is used fraudulently later.

So, do remember to report the loss of your credit card to your credit card company as soon as possible.

But even if your card has been used, you may only have to pay $50. Do talk to your credit card companies, as some of them have been known to waive this amount. You may like to read more about it here.

If you’d like to know the details of why credit cards are safer to use than debit cards for online purchases, have a look at this.

Here is an example of how our family uses each type of card differently.

These are some of my family members’ experiences with using their cards.

Early this year, my son had a rather unpleasant experience.

When he tried to pay for his lunch using his debit card, it showed insufficient funds, which was strange because it had been topped up 2 days before.

Apparently, some students had pushed very close to him as they were filing out of a class. Using a hidden skimmer, one of them stole his account number which was stored in a chip on his card. It was in his wallet, tucked “securely” in his pocket pants.

When we went to our bank, we discovered that a princely sum of $50.40 had been deducted from that account to make an online purchase. As he only uses his card for food purchases, we realized that his card number had been stolen. Needless to say, he was most upset.

Luckily, the bank staff was sympathetic.

The happy ending was that the amount charged to him was reversed, and he even got a complimentary replacement card.

The new card is more secure – it requires him to key in his PIN number when making purchases. The amount in his card has been also kept small, as an added precaution.

Read about how thieves are using smart phones as skimming devices to steal your credit card information.

(This post contains affiliate links. I may receive a small compensation if you purchase through these links. You do not pay extra. Please read my disclosure policy. I only recommend products that I trust and have received positive reviews).

With this incident fresh in our minds, we realized it’s crucial to extend this protection for our credit cards as well. A quick search on the internet shows that such skimmers can be bought cheaply! How to counter this threat? You need to get special cases like this one (shown below) that block skimmers:

RFID Blocking Wallet Case for Women

or Men, Theft Proof Credit Card Holder,

Slim Design Fits in Front Pocket




These type of cases have been specially made to prevent thieves from stealing your account numbers and they come in a wide range of beautiful colors and designs. Find out more about these wallet cases that look good AND give you peace of mind.

Mr MMT (MoreMoneyTips) also had to replace his credit card twice in the space of a week!

He tried to cancel an online subscription that he didn’t need, to save money.

Despite leaving detailed instructions on the company’s website twice before the subscription was due to renew, his messages were ignored. He went on to their Facebook page to inform them. There was zero response. There was no company email that he could send his message to. It was really suspicious.

If you happen to notice such things, do take extra care. That company duly deducted his annual subscription 🙁

A word of caution: Even though using a credit card provides some measure of protection, you may have to take extra precaution.

You need to gather evidence of your communication so that you’ll be able to dispute the deduction later on. In this case, merely informing the company of the cancellation by using the company’s contact form wasn’t sufficient as we discovered. The forms were submitted successfully, but there was no acknowledgement provided by that company.

On hindsight, Mr MMT should have snipped and saved his messages to them as evidence. As a result, we couldn’t dispute the deduction.

Then there was Ebay. Mr MMT placed an advertisement for the sale of 2 textbooks.

We were unaware that there was a recurring monthly charge at first, as it wasn’t apparent. When we realized this, we tried sending an email to them instructing them to stop the advertisements. Again, there was no response. So the only solution was to cancel his credit card.

After receiving his new credit card, Mr MMT decided to withdraw some cash from an ATM machine in his workplace. but it swallowed his card!

Calling the bank didn’t help. They hadn’t maintained it and had already decided to remove the machine.

The next day, Mr MMT decided to pop into the supermarket across his workplace.

Psst, he’d completely forgotten about what happened the day before.

Only when he got to the checkout did he realize that he’d only $3 cash for the next seven days. He had to return nearly everything he had put in his trolley. Handing over his precious $3, he clutched the precious loaf of bread.

What about me? Surely, I’d have some cash to pass him (eyes down, soft whistling)

Well, no. Mr MMT is my ATM.

The bank will charge me a fee if I withdraw cash, and I’m not going to pay this fee.

So the lesson learnt here is: do put aside some cash in your purse and at home for emergencies.

Our son usually has some spare cash at hand, which he’ll not spend as it’s his own cash. So at times we borrow some from him on the understanding that it would be returned.

With cyber crime on the rise, it’s crucial that you read these 14 smart ways to protect your financial information.


With these handy tips in mind, you’ll have greater confidence in knowing how and when to use each type of payment wisely.

Achieving a balance between using your cash, credit cards and debit cards will certainly benefit your wallet. Ultimately the only person who is in control of your finances is you.

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8 thoughts on “How to Use Cash, Credit Cards or Debit Cards to Your Advantage

  1. CiCi

    I have a credit card and debit card but I rarely carry cash! This is totally fine except for the rare event somewhere takes cash only! I also have a no-fee debit card which is great

    1. moremoneytips Post author

      Hi CiCi,
      Thanks for stopping by. I only carry cash at certain times when I need to buy items from shops that charge a fee for using credit cards.
      That’s a great move not having to pay any fee for your debit card!

  2. Rukh AZ

    This is such a great post. I’m always worried about my cards being stolen cos i’m SUCH a careless person. lol.
    very well written. keep it up 🙂

    1. moremoneytips Post author

      Hi Rukh AZ,
      I’m glad you like this post 🙂
      I’ve another post where you can protect your financial information in 14 ways.
      I’ll link it to this post. Thanks for your encouragement!

  3. Namrata Sinha

    I really liked your post, when we have a credit card we end up buying unnecessary things. I have a very bad habit of not carrying cash when I go shopping. Great post!

    1. moremoneytips Post author

      Hi Namrata Sinha,
      I’m delighted you like it. Being given different options to pay these days, it can be tricky at times to decide which payment method offers us the best deal. I’ve also made mistakes in paying for things in a hurry before and then realizing a while later that it wasn’t in my best interest. We’ll just have to hit the pause button first 🙂

  4. Athena

    Credit cards can be very beneficial if used properly! It’s nothing to be afraid of if you have self control.

    1. moremoneytips Post author

      Hi Athena,
      You’re absolutely right! It boils down to individuals and their ability to control themselves and how they choose to use their credit cards.When we pay off our balance in full, we get to enjoy the interest-free period and lots of other benefits too. 🙂

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