It’s no secret that Bill Gates understands money. To help others reach a similar understanding, he recently founded the Better Than Cash Alliance, an organization aimed at helping poor Americans achieve financial inclusion by learning how to use electronic payment methods.
Poor Americans aren’t the only ones threatened by a cash-only lifestyle. While some may fear “spending money I don’t have,” or “paying interest on a bag of groceries,” using credit wisely is step one on the path to a strong financial reputation. Below are just a few of the benefits of using debit and/or credit in your daily life. If you fear credit and its uses, allow these reasons to open your eyes.
Why is credit better than cash?
• Convenience and peace of mind.
Forgetfulness is a common catalyst of credit repair. If you constantly ask yourself, “Did I pay the bills this month?” then credit and/or debit payments are your best bet. Paying electronically provides you with a record of recent and past payments. The majority of creditors also supply receipts once an online payment is accepted. The result allows you to keep track of your finances and avoid credit repair blunders along the way. You can’t lose.
Millions of people suffer at the hands of identity theft each year. Thanks to credit, however, banks and other lenders offer protection against these crimes when you use their services. For those of you who still send check payments in the mail, beware. While your bank may be willing to help once identity theft is established, locating the person who stole your mail is unlikely. For those who dare to send cash in the mail (a definite no-no), you’ll have little recourse if your payment is lost or stolen. The bottom line: Stick with a payment method that protects your cash and honors your financial commitments.
Establishing a reputation is a top priority when considering a switch to credit. After all, what’s in it for you? Learning how to use credit wisely allows you to build a strong credit report and score, opening doors to better opportunities. While your cash-only lifestyle may have served you well in the past, it won’t do much to help establish a written record of responsibility. Creditworthiness requires proof—a virtue you must work to create.
Speaking of opportunity, you’ll be hard-pressed to find investment opportunities, airlines, hotels, etc., that offer cash-only options. Businesses require security too, and asking you for a credit or debit card number offers just that. Consider all the experiences you’ll miss by opting out of the credit world.
With the latest news in rising credit card fees, you may be wondering how credit can save you money. The simple answer is credit repair. When you use credit wisely, your credit score grows, thereby illustrating your level of responsibility. A high credit score allows lenders to provide you with better deals, lower interest rates, and big savings over time. While credit vs. cash won’t bring you instant savings, the long-term benefits could save you thousands on mortgages, car loans, insurance premiums, personal loans, and more. Why waste a free opportunity?