Cash vs. Credit – What Should be Your Preference This Holiday?

A proper plan and deciding upon the budget is necessary before the holiday period starts. The expenses that incur during a holiday may leave a hole in your pocket, if they aren’t planned properly. The ideal way is to make a budget and stick to it, as planning and executing your holiday can be an expensive affair. Making the right budgets during the planning phase is of the utmost important for every individual. As per a survey, more than 60% people make budgets for their holidays. However, not all of them are able to stick to it and exceed the estimated budget.

There are numerous expenses that you need to take care of, irrespective of the fact whether you are moving out to spend your holidays or staying in town. Now a question arises; should you use cash or credit cards during holidays? Let’s try and find out the answer to this question.

The Risk of Credit Debt

As per a recent survey, people who use cash for their spending during the holiday tend to spend lesser as compared to the ones who use credit cards. The main reason behind this behavior is that when an individual runs out of cash or have a lower amount of cash in their wallets, they simply can’t buy anything you want as the purchasing power is backed up with the availability of cash. However, the excessive use of credit cards can land you in unwanted debts in the later stages. It is always a better move to let go a tempting offer now to avoid getting into troubles later.

With the use of credit cards, resisting a particular offer becomes a tad bit more difficult. High credit card balance can lead to more purchases that can result in higher debts. The use of cash is definitely a better option in such a scenario.

Resisting the Temptations

A clever trick employed by credit card companies in association with different brands to lure in customers is by tempting them with discounts they can avail with the use of credit cards. Getting to see a huge discount on your favorite brand can be difficult to resist and you may end up making purchases you did not intend to.

The 20% or 30% discount on different products if you purchase them through your credit card may sound an attracting offer. However, you may often end up paying more than the actual price because the interest rate will accumulate up if you wouldn’t be making payments to your within a month.

It is a commonly observed trend that people tend to buy a holiday gift for themselves even if they don’t have a budget for it. Surely, pampering oneself with gifts from their hard earned money is necessary, but doing so with the risk of disturbing your budget is definitely not a wise move. As per a study, 17% people are found the guilty of getting themselves a holiday gift despite having a tight budget.

Credit Cards – Are they of any use?

With all the discussions above, you must be questioning the usability of credit cards. They can come in really handy if you are in a position to clear off the balances in the near future. Otherwise, it is going to be a tricky situation in which you are going to land yourself in. Furthermore, you can enjoy certain extra features that you may not get with cash purchases such as extended warranties, the return of damaged goods etc.

In the end, it’s all about having the adequate balance in your credit card account to avoid landing yourself in unfavorable circumstances.

Using Technology for Savings

The world has advanced and almost all of manual work has been taken over by artificial intelligence. Gone are the days when you would need a paper and pencil to draft your holiday budgets. You can have dedicated apps for this purpose.

Various apps especially created for the budgeting purpose are available on IOS’s AppStore and Android’s PlayStore for you to download. These apps allow you to make budgets and stick to them in the most effective manner. All the important holiday essentials such as traveling expense and gifts etc. can be tracked with these apps. Furthermore, there are electronic calendars, which can remind you of any pending and due payments that you need to make so that you can stay on track and interest rate remains on the lower side.

Going the Traditional Way – Allocating the Resources

The best way for enhanced savings and keeping the budget on track for families planning the holidays is to allocate the resources to every individual. Make sure they stick to the resources allocated to them. This will result in little to no chance of overspending and landing into debts.

If you are planning to buy gifts for your loved ones in the holiday period, the thing you need to do for remaining in your budget bracket is to allocate a portion of the budget for each of them. Make a priority list and spend accordingly. This is only possible if you are cash instead of credit cards during your holidays as the behavior pattern that has been observed with the users of credit cards is that they tend to overspend thinking they will somehow manage to clear off the debts in later times. However, they may not be able to do it and land them in some not so favorable conditions.

Getting gifts for your loved ones on holidays and special occasions definitely add value to your relations but doing so by disturbing your budget is not considered to be a wise move. Of course, the sentiments matters but not more than you missing out on a credit card payment.

The gist of this story is that the use of cash has an upper hand as compared to the use of credit cards during holidays. The use of cash saves you from overspending and lets you enjoy the holiday period without drilling a hole in your wallet.