Cash or Card: Which Payment Option Should You Choose at Checkout?

Cash or card? It’s a common question many of us encounter when we reach the checkout line at the grocery store and other retailers, but which method really is the best option?

It depends. With technology continuing to advance, more options like mobile payments and even services like buy-now-pay-later (BNPL) for online shopping enter the equation.

If you find the abundance of options overwhelming, you’re not alone. Here are tips to help decide which option will work best for your needs.

Cash, Debit and Credit Cards

A recent WSFS Money Trends survey found that 44% in the region are using their debit card more often this year, 36% using cash, and 35% using their credit card more often. These payment methods are often the ones consumers find themselves most comfortable with based on hands on experience using them.

Each offers its own benefits and tradeoffs that can help determine when the right time is to use it, including:

• Cash: The world may be increasingly digital, but cash still plays a key role. Many consumers can maintain a stricter budget when using cash for payments, as it often causes them to think a bit more before purchasing. Not all retailers accept cards and some retailers have also started passing along card transaction fees to their customers, so keeping at least some cash on hand is a good idea.
• Debit Cards: These funds are drawn directly from your bank account and should be treated like using cash. As a result, many consumers also opt for debit cards vs. credit cards when they are trying to stay on budget. You can also leverage account alerts and card controls for your debit card to help stay on top of your finances.
• Credit Cards: Using a credit card can provide a host of benefits, including earning rewards like cash back or hotel and airline points that have soared in popularity in recent years. But it is important to use credit responsibly. Using a credit card for regular purchases can help improve your credit score over time when paid back in full regularly, which in turn can lead to better rate offerings for credit cards and loans in the future. The most important thing is to remember to live within your means to avoid falling into debt.

Online and Mobile Payments

The WSFS survey also found that 35% in the region are using buy-now-pay-later (BNPL) platforms more often this year. BNPL and other online and mobile payment methods have also risen in popularity in recent years, with a few options including:

• BNPL: A newer entrant in the payments space, BNPL enables consumers to split eligible online purchases up into installment payments. Repayment terms vary by provider, but oftentimes include splitting the cost over four payments that do not include interest if paid back on time and in full. While BNPL can make purchases simple with just a few clicks, borrowing limits are typically lower than a credit card so there are tradeoffs.
• Mobile Payments: Digital wallets have seen increasing adoption in recent years, and for good reason. As smartphones, watches and more have taken off they’ve also become convenient ways to check out at the store. Using Apple Pay®, Samsung Pay® or PayPal®, consumers can link their debit or credit cards to securely check out using a mobile device without the need to carry their cards with them.
• Peer-to-Peer (P2P) Payments: Platforms such as Zelle^® and Venmo have made transferring money between friends and even paying small businesses a breeze. When using P2P platforms, remember to treat that money like cash and confirm you’re sending it to the correct recipient before transferring large amounts. Sending a small test transaction first can ensure your money reaches its intended destination.

Whether using your cash, debit card, credit card, or mobile payments, it is important to remember to live within your means to not overextend yourself financially. Remember to pause before you pay to help decide if the purchase is a true need or if that money could be saved for a rainy day.