Is it better to use Cash or Credit? There are some who swear off credit cards completely, believing they only bring financial ruin to most. At the same time, others swear by credit cards for their security, convenience and rewards. While this isn’t a one-size-fits-all issue, it’s worth considering the pros and cons of cash versus credit transactions. Ultimately it’s a personal decision and you have to decide what works best for you.

To give you a few things to consider we have come up with the following:

The Benefits of Spending Cash

• Control Spending: Spending cash can help many control how much the spend in two ways. First, as the old saying goes, you can’t spend what you don’t have. If you stick to cash, once you’re out, you’re out. Second, study after study has shown that many folks tend to spend less many when they use cash as compared to credit. I think this is true. For example, if you only have $20 bucks on you then you can’t spend $30. This isn’t the case when using a credit card.
• Avoid Fees & Interest: By spending cash, you eliminate the possibility that you’ll pay interest charges or credit card fees. And if interest and fees start to rack up, they can create a snowball of financial turmoil that’s hard to stop.
• Accepted Everywhere: I have yet to find a place that doesn’t accept cash. On the otherhand, there still are some places out there that don’t accept plastic. If you carry cash then you can be pretty sure you aren’t going to get turned away.
• Possible Discounts: Some places will give you a discount if you use cash instead of a card. Remember, it costs to process a credit or debit card transaction. If you are willing to pay cash then it might save you some money.

The Benefits of Using Credit Cards

• Security: There is no doubt using a credit card is safer than using cash. If you lose your cash it can’t be replaced. If your credit card is lost or stolen and it is used without your permission the most you can be held liable for is $50. Also, you have the ability to dispute a charge if a purchase goes wrong when using a credit card.
• Rewards: Credit cards that offer cash back, travel or other rewards can pay off, so long as you pay the balance off in full each month. Just putting everyday spending on a card can result in hundreds of dollars in cash back rewards each year.
• Better Tracking: When you use credit you can keep close tabs on how you spend your money. Managing your money is much easier because it’s done electronically. You don’t have to keep receipts and write down transactions because it’s done for you. Plus, if you use money management programs like Quicken or Mint.com you can easily export your transaction history and manage all your accounts in one place.
• Interest Free: If you pay your balance off each month then you are bascially getting an interest free loan for 20 to 30 days based on your billing cycle. This is about the only time you can borrow money from a bank with no intrest. Also, you can always take advantage of an offer that gives 0% for a longer time period like 12 months. This is ideal for a big purchase that you might need extra time to pay off.
• Purchase Protections and Waranties: Many credit cards come packed with purchase protections and waranties which safeguard your purchases. This extra security helps you in the event you purchase an item that ends up being damaged or has a defect. Each card works different so you have to check the terms of your agreement, but this type of protection can save you money.

Photo Credit: YIM Hafiz via Flickr

It’s a no-brainer that the lower a credit card’s interest rate, the better, right? Well, not so fast. It turns out that low interest rate credit card offers are not always the best option. While this seems counter-intuitive, it is a really important consideration when evaluating credit cards. To understand why, consider the following:

• A credit card’s interest rate only matters if you have a revolving balance. Pay off your card every month, and you pay no interest at all, regardless of the interest rate.
• Many low interest credit cards do not offer other card features, like cash back or travel rewards, or they offer these incentives in lower amounts than other cards.

To see this in action, let’s take a look at two card offers: Iberia Visa Classic and Discover More card.

• The Iberia Visa Classic offers one of the lowest interest rates available from a credit card. Based on your credit, you might qualify for a rate of either 7.25-13.25% (Variable)*. The card comes with an introductory rate of 0% balance transfers for 6 months on balance transfers* months, but no other rewards.
• Discover More comes with an interest rate ranging from 10.99-20.99% (Variable)*, depending on the cardholders’ credit history. At those rates, the Discover More card charges an interest rate roughly 2x to 3x more than the Iberia card. But it comes with much richer rewards. The card offers an introductory rate of 0% for 15 months on purchases*. It also comes with rich cash back rewards as high as 5% to 20%.

So as between Iberia Visa Classic and Discover More, it’s the higher interest rate card that would be best for many who pay off their card each month. In fact, even the occasional revolving balance for a month or two may still favor the higher rate Discover card.

Why do higher interest rate cards often offer better benefits? The simple answer is that with higher interest rates, the card issuer has more revenue that it can use to fund richer reward programs. Cards with rates as low as 7.25% can’t offer the same rewards and still turn a reasonable profit. Of course, if you regularly carry a balance on your card from month-to-month, than the lower interest rate card is probably the best bet.

There are, however, some cards that offer both lower interest rates and rich rewards. Another good example of this type of card is the Capital One® VentureSM Rewards Credit Card. The No Hassle Miles card comes with an interest rate between 13.90-20.90% (Variable)* and offers up to 2x miles for every dollar spent.

Generally lower interest rate cards offer fewer rewards, but you can find offers like the Discover More Card and the Capital One® VentureSM Rewards Credit Card that give you the best of both worlds. So if you pay off your card each month in full, remember that the interest rate on the card may not be the most important consideration.

A question that often stumps many is whether it’s better to use a debit card or a credit card when making a purchase. Just for a quick recap. A debit card requires you to enter a PIN (personal identification number) when you use the card at a retail store (as if you were withdrawing money from an ATM) and you can get cash back. A credit card doesn’t require a PIN, you can’t get cash back, and you must sign the merchant’s receipt copy if the purchase is more than $25.

The confusing part is that today, banks issue Visa and MasterCard branded debit cards, so the same card can function as either a debit card or a credit card. With these joint cards, the money is taken from your linked checking account regardless of whether you use the card in a debit or credit transaction. And because of this, many folks incorrectly believe it makes no difference at the store whether you use the card as a debit or credit transaction. But as Paul points out in the article, the choice you make is really important.

So the next time the store clerk as you “debit or credit,” keep the following in mind. First, credit transactions tend to be more secure than debit transactions. Debit transactions are processed through the electronic funds transfer system, with comes with fewer cardholder protections. There is also a second consideration to keep in mind–rewards programs.

Many debit/credit cards today come with rewards programs. Our debit card earns us American Airlines miles. But here’s the catch. We only earn those miles for transactions that are processed as a credit. Why? Because debit transactions are not processed through the credit card issuer. As a credit transaction, the credit card company earns a percentage of the transaction from the merchant, which helps pay for the rewards program. So if you want to earn the miles or points or cash back that your bank card may offer, always use the card as a credit card, not a debit card.

I love our dog. Her name is Sophie, and that’s her picture above. One thing we’ve learned the hard way over the past two years, however, is just how expensive a pet can be.

Regular trips to the vet can quickly put a dent in our bank accounts, not to mention the unforeseen costs that can take place if an emergency occurs. If you’re like my mom and have more than one furry friend, then your costs can double or even triple before you know it. She has two dogs and is temporarily fostering a third. Just over the last week an unplanned trip to the vet cost her $400. One option that I have recently found that can make these costs a bit more manageable is Care Credit.

Care Credit is a personal line of credit that can be used for your pet care and your health care expenses. It works just like a credit card, but can only be used for health care services. The great thing is that it can be used for all members of the family, even the four legged ones.

The card offers a no interest option on every purchase you make. All you have to do is pay your minimum monthly payment and pay off the balance by the end of the promotional period. Not all health care providers take Care Credit, however, so be sure to check first.

Below are the two interest options Care Credit offers its card members. The no interest option is a deferred interest plan, which means the accumulating interest will be charged to you if you don’t pay the balance off in the agreed upon time frame or if you are late on the monthly minimum payment.

Important: Because terms and conditions can and do change frequently, be sure to check with Care Credit before applying for a card.

No Interest Option

The Care Credit Card offers no interest on your purchases if paid within 3, 6, 12, 18 or 24 months. A $300 minimum purchase amount is required for plans longer than 3 months on the CareCredit account. A monthly payment is required, but no Finance Charges will be assessed if you meet the following restrictions: On promo purchase balance, monthly payments required, but no Finance Charges will be assessed if (1) promo purchase balance paid in full in 3, 6, 12, 18 or 24 months, (2) all minimum monthly payments on account paid when due, and (3) account balance does not exceed credit limit. Otherwise, the promo may be terminated & Finance Charges assessed from purchase date.

On promotions requiring a minimum payment, payments over the minimum will usually be applied to those promo balances before non-promo and other balances. If you have a non-promo balance, this may reduce the benefit from the promo.

Extended Payment Plans

This option is valid on purchases of $1000 or more (24, 36, 48 months) or $2500 or more (60 months) made on the CareCredit account. On promo purchase, fixed monthly payments equal to 4.7966% for 24 months, 3.4129% for 36 months, 2.7276% for 48 months, or 2.3216% for 60 months required, but finance charges will be applied to promo balance at the reduced daily periodic rate of .03808% (ANNUAL PERCENTAGE RATE 13.90%) if (1) promo purchase paid in full in 24, 36, 48 or 60 months, (2) any minimum monthly payments on account paid when due, and (3) account balance does not exceed credit limit. Otherwise, promo may be terminated.

Bottom Line

I have read both favorable and unfavorable reviews on Care Credit. All the unfavorable reviews stem from the deferred interest part of the card. It is important to understand that in this case the No Interest option is a deferred interest rate. This means that if you don’t pay the balance off in the required amount of time, then the accumulated interest will be added to the balance of your card. In the event that this happens, it could add hundreds of dollars onto your balance.

There are several very good interest free cards that may make a good alternative to Care Credit.

It wasn’t long ago that prepaid credit cards were viewed as an expensive alternative for those who couldn’t get a credit card or open a bank account. A lot has happened over the past few years to change this perception. In fact, today, prepaid credit cards come with many advantages you won’t find with credit cards or banks.

Some of the key benefits can be found in what prepaid cards don’t come with: interest charges, over the limit penalties, late payment penalties, or overdraft fees. But as the prepaid card market has grown, cards have added more advantages that many people don’t know about. Here are 7 of the more significant perks you can get with a prepaid card:

1. Low Fees: While prepaid cards at one time were very expenses, today you can find several free prepaid credit cards. These cards come with no activation fee, no transaction fee, and even no monthly fee in some cases. The key is to understand how you will use the card and to avoid costly mistakes. For example, will you make a lot of ATM withdrawals, or will you mostly use the card at retail locations? Knowing the difference up front can help you pick a card that offers low fees for the types of transactions you plan to make.
2. Rewards: While rewards use to be tied only travel or some of the best cash back credit cards, today several prepaid and debit cards offer various rewards. The PerkStreet debit card, for example, offers up to 5% cash back. And several prepaid cards offer bonuses if you load the card with direct deposit.
3. High Interest Savings Accounts: Oddly enough, the best high interest savings accounts come from prepaid cards, not banks. For example, the Mango prepaid MasterCard offers an FDIC insured savings account that currently pays 5.1%, well above anything you could get from a bank. Netspend, another popular prepaid card also comes with a high interest account option. There are some limitations. For example, there is a limit on how much you can deposit and you must sign up for direct deposit. But the interest rate is exceptional.
4. Free ATM Withdrawals: While most prepaid cards do charge for ATM withdrawals, both the Green Dot and NetSpend prepaid cards have a large network of ATMs where you can withdrawal cash from your card for free. It’s generally better to simply get extra cash back from a retailer when you make a purchase, because they don’t charge fees. But if you plan to use the ATM to get cash frequently, make sure to get a card with no ATM Fees.
5. Online Bill Pay: Several cards offer online bill pay, much like you’d see from an online bank. Perhaps the best known offer comes from AccountNow, which offers the service for free. The Rushcard also offers online bill pay, but for a small fee. With these cards, many people manage their money very effectively without a bank account. And if you are part of the Chexsystems and can’t qualify for a checking account, these prepaid cards are a convenient, low cost alternative.
6. Check Writing: For those cards that offer online bill pay, you can also have them write a check for you to pay bills to creditors who do not accept online payments. You simply enter the information online with the prepaid card company, and they do the rest.
7. Direct Deposit: Finally, almost all prepaid cards offer direct deposit of paychecks and government benefit checks. With direct deposit, you don’t have to pay for expensive check cashing services, and you get access to your money immediately.