Cash, Debit, or Credit – How Do You Pay for Big and Small Purchases?

There’s no question that people like money — it’s nice to have in your bank account, it feels good to get a raise, or even get some extra birthday money. Generally speaking, most people can agree that having money is a good thing.


But there is a way that money can be very polarizing, yet very personal: the method in which people spend their money. From cash, to debit and credit, everyone seems to have their own preference for how they pay for big and small purchases. Below you’ll find a glimpse into the pros and cons of using each:


Some people swear by a cash-only lifestyle. Personal finance gurus like Dave Ramsey tout the benefits of the envelope budgeting system and only paying for things with cash. The thought is that you allot a certain amount of cash to each budget category, and once the money is gone, it’s gone. Cash is a physical entity that you can see and feel leaving your wallet. This relationship makes some people believe that using cash is the way to go.

On the other hand, cash is hard to track. Others on the opposite side of the spectrum can’t seem to keep cash in their wallet and have a hard time remembering where it all went. Depending on your budgeting style, cash can be your best friend or your worst enemy.

Personally, I like cash, but only up to a certain point. I love having cash in my wallet and knowing that I have money readily available. It also has a certain aura to it — a mystique. I recently got my hands on a new Big Ben ($100 bill) and I looked at it with awe. Money is prettier than ever.

Whether you use cash apparently depends on what you are buying, too. According to a report, 65 percent of Americans pay cash for items under $5. Cash is nice to have on hand for small purchases like coffee, a parking meter, a tip, etc. For big purchases, it gets a little tough. I suppose you could pay for big ticket purchase items in cash, but I feel nervous about carrying large amounts of cash on hand. It’s a remnant of my travel mindset, where things can often get stolen, go missing, or you are at the mercy of pickpockets.

But there is one undeniable advantage to cash and one field that would crumble without it: the vice economy. The vice economy includes things like strip clubs, drugs, and other debauchery. You pay for those things in cold hard cash. Other industries that heavily rely on cash include the gig economy (a la things you would buy/people you’d hire on Craigslist) and the black market. You’re not going to buy a spare lung with a credit card.

So why is cash the driving force behind these left-of-center economies? Because you can’t track it. With a debit, or credit card, you can easily trace purchases. For something that is questionably legal, you want to be discreet. Cash is king.

While cash can be helpful for budgeting, small purchases, and a night of fun, it’s also easy to lose. Have you ever found money on the ground? I have. That means someone else lost their money. Cash is easy to lose and easy to steal. If someone takes your cash, you’re not getting it back.

Debit Card

A debit card can hold some of the same benefits as a credit card, but it’s linked to your checking account. Using a debit card can be great if you are working your way out of credit card debt, but want the convenience of using a card.

Using a debit card can help you easily track your purchases. However, if you aren’t mindful you could continue to swipe and not realize you are dangerously close to zero. From a security standpoint, debit cards can offer fraud protection and help track everything. But if it gets in the wrong hands, you can find out the hard way. For example, if someone gets access to your debit card and spends all your money, you might only find out after you bounce a check, or you get that dreaded message ‘insufficient funds’.

To get that cash back, after dealing with a fraud investigation, might take days or weeks to get back. Another downside to using your debit card is that it doesn’t help build your credit. Your credit can be an important factor in deciding whether you get approved for a loan.

In short, debit cards are good if you want to use the money you have, but also easily track each purchase. It’s key to keep checking your account balance and make sure the card doesn’t get in the wrong hands.

Credit Cards

People love them or they hate them. Gurus like Dave Ramsey loathe them, while travel hackers adore them.

Credit cards, when used wisely, can be a nice payment option. Paying with a credit card doesn’t deplete your money right away, it tracks all your purchases, and can offer rewards such as miles, or cash back.

I started travel hacking last year for the first time. I was hesitant at first, as I got my first credit card at age 28. I hated the idea of debt and didn’t understand why you would pay for something now, later. But now I realize that if you are a responsible borrower and pay back your credit card balance each and every time, you get to reap the rewards.

My credit score went up and I was able to travel hack my way to Spain for $63, after getting the credit card sign-up bonus.

One major downfall with credit cards is the possibility of credit card creep. Some studies show that people spend more when using a credit card. It’s easy to mindlessly swipe and say “I’ll pay it later” and then be shocked when you see the balance. Credit card creep can lead to credit card debt. And if you are already in credit card debt, you understand how easy it is to swipe and get yourself in the red. Credit card limits can be seen as carte blanche access to buy whatever you want. So they must be used wisely.

From a security standpoint, credit cards are a mixed bag. With all the security breaches lately, your info can easily be shared. On the other hand, when you have proof of payments, it’s easier to get those charges resolved when they are fraudulent.

What Do You Use?

While your preferred method of payment may be dictated by your purchase, your age also plays a huge role in your payment preference. Millennials prefer plastic over paper, while older generations lean towards cash.

Personally, I only use cash and my credit card. Now that I’m travel hacking, I want to reap the rewards of using my credit card for bigger purchases, and “needs” like groceries. I use cash for “fun” money, in order to avoid credit card creep and support small businesses.

I want to know — how do you pay for big and small purchases? What is your preferred method — cash, debit, or credit? Why?

4 thoughts on “Cash, Debit, or Credit – How Do You Pay for Big and Small Purchases?”

  1. I use a combination of both cash and debit. I’ve just started o consider credit cards for the possible rewards and travel hack possibilities. he rule of thumb I follow is alwas make sure I have the cash to pay for any purchase big or small and not matter what method of payment I use.

  2. After getting fed up with the bank fees to just owning a debit card, I decided to go cash. I only have the business account (we need an account to run the business) and nothing else for me personally 😀

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