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‘Cash or credit?’ Northwestern Mutual breaks down benefits of both

Ashley Temer is a Financial Representative with Northwestern Mutual who helps professionals, families, and business owners plan for financial security. She’s here for your “Money Minute.”

Cash or credit? Many financial experts suggest using credit whenever possible in order to earn cashback or other valuable rewards. But others caution against credit, encouraging the use of cash to guard against financial excess. There’s an element of truth to both sides, and whether you should pay with cash or credit, usually depends on your own cash management skills.

If you’re generally good with credit and pay off all or most of your card bills each month, it makes sense to maximize cashback or rewards by paying with plastic, otherwise, it’s just free money that you’re missing. Exceptions would include circumstances in which there are high fees or where temptation may lead to excessive spending and cash could serve as a means of tempering your spending.

If you have poor credit management habits, you should rely on debit and cash until you can master the use of credit. Paying with cash makes your spending easier to track and generally increases your version of spending.

How you choose to pay impacts your bottom line in more ways than you might originally think.

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