Benefits of Paying with Cash

• Paying with cash ensures that you have the money to cover the cost of the purchase. When you pay with cash you are using money that you currently have and you are not postponing the payment. Also, many people tend to spend less when paying with cash for psychological reasons. It is harder to waste money when handing over cash than it is when simply swiping a credit card. Finally, there is no interest charge associated with paying with cash.
  
  

Benefits of Paying with a Debit Card

• When you pay with a debit card you are also using money that you currently have to pay for the purchase. Most debit cards are linked to a checking or savings account. When you make a purchase using a debit card the cost of the purchase is deducted directly out of your account. If there is not enough money in the account the transaction will be denied. You will not incur interest charges when paying by debit card.
  
  

Benefits of Paying with a Credit Card

• Credit cards allow you to postpone the payment of the purchase. Credit cards are a viable alternative if you are a little short on cash but need to make a purchase. As long as you stay within your credit card limit and make timely payments credit cards provide a quick and convenient method of payment. If you carry a balance on your credit card you will be charged interest.
  
  Credit cards can be used to earn free products and services through the credit card's reward program. Every dollar you spend on your credit card will earn a reward point. These points can be traded in for free airline tickets, hotel rooms and other merchandise. Paying by credit card to earn rewards is a good strategy as long as you are able to make the credit card payment in a timely manner.
  
  

Warning

• You will face consequences if you do not pay your credit card bill on time. First, you will likely be charged a late fee. Also, your interest rate on the credit card may be raised. Finally, if you are delinquent on your credit card payment the credit card issuer will inform the credit monitoring bureaus. In turn, the credit bureaus will decrease your credit score. Lower credit scores can cause you to incur higher interest rates on loans or may cause a loan to be declined all together.