To Charge or Use Cash? That Is the Question

To Charge or Use Cash? That Is the Question
Stefanie O'Connell
By: Stefanie O'Connell
Updated: May 11, 2018
Experts share their tips and advice on, with the goal of helping subprime consumers. Our articles follow strict editorial guidelines.

The next time you’re tempted to swipe your credit card, pause to ask yourself four important questions. It can mean the difference between using your credit card as a helpful tool and falling into a deepening spiral of consumer debt.

1. Do I need this right now?

The want-versus-need gut check is a good habit regardless of how you plan to make your purchase. It’s particularly important when it comes to credit and you rely on a card to buy what you couldn’t afford otherwise. If you’re going to spend money you don’t have, it had better be on a true need like a medical emergency rather than an impulsive shopping spree.

do I need this?

2. Is it worth twice the cost?

If you are having trouble determining the true necessity of a purchase, ask yourself if it would be worth double or triple the cost. When purchases end up on a credit card with a hefty 15 to 18 percent interest rate and you only pay the minimum amount each month, the net cost of the purchase, once you factor paying interest, is going to be double or triple the initial purchase price. Before you swipe, be sure to multiply and then ask if it’s really worth it.

worth twice the cost?

3. Can I wait to pay with cash?

If you can afford to wait to make a purchase until you have enough cash to pay for it outright, you can avoid the long payoff time and the interest that comes with it. Waiting might also help to separate wants from needs. In the heat of the moment, it’s easy to believe you need something. If you can afford to wait a day or a week, maybe you’ll find you can afford to forgo the purchase altogether.

can I wait to use cash?

4. Why am I using credit?

Make sure you’re using your credit card for the right reasons before you start swiping. Good reasons include building your credit with card purchases and on-time bill pay or financing an emergency situation. Bad reasons include subsidizing unnecessary purchases or trying to earn rewards on a card whose balance you already can’t afford.

how should I pay?

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