CASH VERSUS CREDIT CARDS

CASH VERSUS CREDIT CARDS

differences between cash and credit cards

The modes of payments in today’s world has evolved from the historical barter trade to the use of notes and now the presently use of paperless money. It’s evident that human beings can’t live without change as new and better technologies emerge for the better of humankind (Zealand, 2011)
. To start with I describe cash and credit cards to bring to limelight the vast differences that exist between the two. Cash is a current asset easily accessible by the owner while a credit card is an acceptable physical card to obtain credit. Cash can be viewed as a physical form of currency or bank notes legally acceptable, however this extends financially to include currency equivalents that can be accessed instantly as in the case of money market accounts. Credit cards on the other hand allow the card holder to obtain credit in the agreement or obligation to pay for the good or service at a later time with an interest. It extends ownership by borrowing by use of a payment card that will be charged later (Deering, 2005).

One of the most notable differences between cash and credit cards is that cash is most acceptable worldwide than the credit card. This will be brought forth by the vast differences between the two that make cash more preferable in the contemporary world. Generally cash is changing hands more in the world than the value involved in credit cards (Zealand, 2011). This can be attributed to technology adaptation cycles and the availability of systems to handle such technology. Credit cards can be said of as a relatively new technology and therefore it takes time to adapt to new technologies (Frazer, 1985).

            Credit cards transactions are carried out electronically while those of cash are carried physically. A credit card is just a payment card and is only read by chip access electronically or by use of magnetic strip. Cash is physical and the involved parties are at a position to see it, count it and verify its legality. In the contrary the parties involved in credit card transactions only deal with signals generated electronically and displayed to represent the value transacted. While the cash transaction is physical and all procedures are done physically that of credit card can be attributed wholly to be a machine task and people deal with displayed electronic signals (Schreft, Smith, & Division., 1999).

Credit cards usually involve transaction fees charged to the card holder in the situation of transactions. A cash transaction does not usually involve such fees as it forms a direct form of payment. The credit card is an indirect form of payment and the fact that the card holder is relieved of the burden to carry cash or to have the cash at the moment, the card service provider charges a percentage amount to the value of the transaction. Cash payment will have no transaction charges in most cases as there is direct transfer of ownership and there is no involvement of third parties in the transaction. Therefore in such a situation cash payments can be viewed as cheaper to transact as opposed to credit card payments (Greenfield, 1983).

Credit cards are suitable for online purchases as opposed to cash transactions. Credit cards involve electronic transactions and can be viewed in money markets as paperless and limitless in boundaries as opposed to cash transactions where there must be a physical link between the buyer and seller to complete transaction. Online purchases and transactions do not necessarily require the buyer and seller to meet as seen in most cases. This eliminates transportation of the cash as well as that of the parties involved. Credit cards can be termed more convenient in such a case of online marketing, for instance PayPal involves the online transfer of value ownership without the buyer and seller having to know each other, therefore online marketing success can be wholly attributed to the presence of paperless money (Loewen & Fitzgerald, 2005).

            Cash transfers direct and instantaneous ownership as opposed to credit cards where the payment is delayed or the value of ownership transfer termed futuristic. A cash transfer will see the transferred value so liquid that the acquired value can be utilized instantly as opposed to a credit card. The seller has to wait for a transaction to complete and has to withdraw his cash to get his or her new value as liquid as in the case of a cash transaction. The cash transaction in such a case can be preferred where the seller needs to have his value instantaneous (Manning, 2000).

            Credit card payments are suitable for high value transactions as opposed to cash transactions. To carry cash physically is bulky, insecure and in some situations unconstitutional (illegal). It thus relieves the involved parties the burden to carry huge amounts of cash. Carrying huge amounts of cash is risky and mostly prone to theft and the government might in most situations restrict individuals carrying a certain maximum limit of a given currency. A credit card transaction is safer as thieves can’t get a direct access to the money even in the event they steal the credit card. Therefore in the events of huge transactions credit cards can be seen as far much better off. The transport of huge amounts of money in the situation of banks is inevitable and it’s highly risky. In the event of theft the cash taken give thieves an instantaneous transfer of ownership as opposed to accredit card. As a result the cash transportation can be seen as a costly endeavor as security becomes a major consideration (Schreft, Smith, & Division., 1999).  In the event of cash loss it usually results in total loss. The loss of credit cards transactions is an electronic data alteration and can be easily traced and recovered with simple clicks of a computer.

            Handling cash is unhygienic more than handling credit cards. The use of cash usually involves the transfer from one party to another and in the process the money becomes contaminated. This results in transfer of germs that usually cause diseases as in some cases bank notes have been recorded top transmit tuberculosis (Schreft, Smith, & Division., 1999). Credit cards are usually personal and the owner deals with a credit card and a card reader, presently we have infrared card readers that don’t involve swapping the card in the machine but rather waving over it. This is more hygienic as less contact is involved.

Lastly cash can in most cases be seen as having no transaction limits. Credit cards have maximum limits on transactions depending on the reliability of a client scored by the card provider. Cash is suitable for smaller payments while credit cards are suited for larger payments. It therefore goes without any say that cash is the mostly accepted (Manning, 2000).

In conclusion it can therefore seem that however credit cards emerge as new and better form of payment, cash remains inevitable and will exist indefinitely.

References

Deering, K. R. (2005). Cash and credit information for teens : tips for a successful financial life : including facts about earning, spending, and borrowing money, with topics such as budgeting, consumer rights, banks, paychecks, taxes, loans, credit cards, and more. Detroit, MI: Omnigraphics.

Frazer, P. A. (1985). Plastic and electronic money : new payment systems and their implications. Cambridge [Cambridgeshire: Dover, NH : Woodhead-Faulkner.

Greenfield, M. M. (1983). Consumer transactions. Mineola, N.Y: Foundation Press.

Loewen, N., & Fitzgerald, B. (2005). Cash, credit cards, or checks : a book about payment methods. Minneapolis, Minn: Picture Window Books.

Manning, R. D. (2000). Credit card nation : the consequences of America's addiction to credit. New York: Basic Books.

Schreft, S. L., Smith, B. D., & Division., F. R. (1999). The evolution of cash transactions : some implications for monetary policy. Kansas City, Mo: Federal Reserve Bank of Kansas City.

Zealand, N. Z. (2011). Electronic card transactions. National government publication , 78.