Canadians may love the perks and convenience of using credit cards but can also be turned off by the interest and fees accompanying them. Some may even think that using a credit card and staying on budget are mutually exclusive practices — but that's not the case. Money.ca provides some reasons why you should use your credit card over traditional cash without incurring fees and debt, while also taking advantage of the perks of using credit.
Both cash and credit have their advantages and disadvantages. Some people have a personal preference for one over the other — so, here's a breakdown of the pros and cons of each method.
Advantages of credit cards
Credit cards offer many advantages to cardholders. Because there are so many options to attract new clients, cards often give bonuses and promotions at sign-on. While the benefits each card may offer are different, here are a few of the advantages of credit cards in general:
Disadvantages of credit cards
Advantages of cash
Disadvantages of cash
After the pandemic, no one wanted to handle cash, so touch-free options like credit and debit tap increasingly became the norm.
There can be several reasons a business may not accept credit and instead take cash, only.
When a business accepts payment by credit card, it pays transaction fees — one service charges 2.65% for each credit transaction — and it could take a few days for the business to actually receive the money in their bank account. When accepting cash, the money is instantly in a business's hands.
Businesses must also purchase or lease a point-of-sale terminal to accept card payments. Not accepting credit prevents a business from being charged back through fraudulent transactions.
In small business and service industry work, there may need to be a higher volume of transactions to warrant taking on those extra costs. Workers want to be paid in cash for their work: for instance, your babysitter, house cleaner or local handyman.
Then, there is also the ability to shield income from taxes. That's not to imply that every cash-operated business hides income from the government, but it makes it easier to do so.
The best rewards credit cards in Canada will let you earn points with regular shopping — the key is to choose a rewards credit card with the best points-earning potential and a solid and worthwhile rewards program that suits your lifestyle.
If you're unsure where to start, consider reviewing a list of the 20 best reward credit cards broken out by category.
If your preference is a cash back card, consider selecting from a list that offers no-annual fee cash back cards to credit cards with premium reward points for specific category expenses.
If your aim is to reduce the cost of carrying a credit card balance, check out the best balance transfer credit cards — credit cards that charge less in interest and help you pay down large card balances, faster.
For shoppers with a goal to save more on travel expenses — or to supplement their travel budgets using rewards — consider a travel rewards credit card.
The advantages of credit cards far outweigh the disadvantages, if used responsibly. If the perks of using credit want to make you say goodbye to using cash forever, how can you do it in a way that doesn't lead you to overspend or build up credit card debt? Here are some tips:
Using credit can provide many benefits, but it also requires a diligent approach to spending. Small changes in how you approach your credit card spending and repayment can result in big rewards. Make yourself the kind of customer that credit cards hate - one who only earns rewards and benefits and never pays fees or interest.
This story was produced by Money.ca and reviewed and distributed by Stacker Media.