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Abstract

There are a lot of ways how one can pay for the goods or services used. Nowadays people more and more use credit cards, which almost replaced cash in the frequency of use. The person can apply the credit card anywhere. He is able to buy everything he wants and there is no need to have a pile of banknotes in the pocket.  Using the credit cards one can buy the products right away, which is the best advantage of it. All in all, there are more advantages in the credit card use than disadvantages. People use credit cards more these days to pay for everyday items like fuel and food. With the appearance of Internet shopping and considering the security a credit card offers, consumers feel more comfortable while paying with plastic than in cold hard cash.

However, it does not mean that paying in cash is no longer in use. There are those for who cash payment is the most reliable way of covering the cost of the good. To choose what payment is better -is very difficult; it depends on the person and his earnings. 

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Credit vs Cash

The first information about credit card appeared in England. It was James Bellami who wrote about the credit card in his book Looking backward, published in 1888.

At the beginning of the last century, American hotels, oil companies and stores produced the cards. At the time it was done with two purposes: to control customer`s accounting and to record his purchasing (Garman 8). The first attempts to introduce the credit cards for publicity were in USA. In 1914, commercial facilities began to give credit cards to their regular customers to attach them to their store chain. Actually, it was General Petroleum Corporation California, now known as Mobil Oil, who produced the first credit card. The customers were able to pay for oil products with the help of this card. This influenced the popularity of the cards amidst the customers. The owner of the card got conveniences and discounts for the items and company got regular customers and stable earnings.

The first bank card appeared in 1951 in New York in Franklin National Bank. Then rapid development of the credit cards began. In 1958, American Express, Diners Club, and Carte Blanche released universal cards. In the same year, Bank of America and Chase Manhattan Bank began operations with the credit cards. However, Chase Manhattan had to sell the operations in 1962, because of a fraud and the abuse of deteriorated quality. At that time, the main disadvantage was a lack of single national network to regulate the operations. It had the negative influence on the small banks. The decision of expansion caused a clash between the other big banks, rivals Bank of America (fourteen New York`s banks). In 1967 it led to the formation of the Interbank Card Association.

In 1969 association bought the authority of Master Charge. By the end of 1970, more than 5,000 financial institutions started using Master Charge. The organization became transnational, and in 1979 it got the name Mater Card. Today, the most famous credit cards are American Express, Master Card and Visa. Almost all people use credit cards all over the world.

Let`s us consider the advantages and disadvantages of the credit cards. The first thing that needs to be said is that it is very convenient to pay for the purchases with the credit cards. It happens when the person doesn’t want to carry much money with him, or in case the company accepts only credit cards (e.g. airliners, hotels and online store). These are exactly the cases to use the credit card while it is easy and comfortable. Moreover, using the credit card the person can get additional protection. If one is not satisfied with the quality of the product and he or she wants to return or exchange it but the receipt was lost, the credit card can prove the fact of purchasing. Besides, some credit cards offer the assurance. What is more, the credit cards can be useful in the emergency situations, e.g. the person had a car accident, and it was a fire or a flood. These situations can lead to great expenses. In such cases, one can get the credit card to resolve the issue with the money.

There are a lot of bonuses and discounts, while a lot of credit cards companies offer additional discounts from some stores or bonuses from companies, e.g. some tour company or free kilometers from airliners. The credit cards will help you to realize a purchase online. If one needs something available on sale and does not have the cash to get it, credit allows the instant getting.  Moreover, buying something by credit card with some creditors means you have a credit record even when you can afford to pay in cash (Preston 6).

Another argument in support of the credit card is that the person can easily check how much money he or she spends a month. One can make a big purchase with the help of credit card. Moreover, the credit cards help to plan family budget.

However, there is another side of the coin. The credit card makes people spend money that they do not have. People have to pay a big percent for the debt every month to the company that produced the credit card. The credit cards can be physically stolen as well cash in case the person’s purse is taken out of the bag or the pocket. Someone can steal the credit card number with the help of the Internet, where the information is kept.  Using the credit card can becomes a habit. Having an available credit card, the person spends more on shopping than when paying in cash. Credit card can largely increase the person`s debt (Preston 5)

On the other hand, the use of cash can be both beneficial and traumatic. Paying in cash, the person will buy the items that are affordable, and the price of which he or she can cover. The man does not have to worry about fees on the credit card, as he will avoid an outstanding debt. Moreover, many stores offer discounts if you pay in cash.

On the order hand, the person has to carry a lot of money if he or she wants to make a big purchase. It is very easy to steel cash, and there is no way to contact the bank and to block it. The person is not able to order products online without a credit card.

From all the abovementioned facts it becomes clear that paying by credit cards gives more advantages than the one in cash. If the person wants something right away, he will be able to get it with the help of credit card, which is the convenient way of payment. One does not need to worry about how much money to put in the purse. In the supermarkets, restaurants, and gyms one can pay by the credit card, not to use cash, not being afraid of losing the purse. One of the most pleasant things about using the cards is the possibility of presents, bonuses or discounts. Moreover, many banks have the loyalty program for their clients who frequently use their credit cards. The credit card can guarantee comfort. You can use it abroad. With the help of the credit card the person can easily reverse the airline tickets, a place in a hotel and other stuff.

Nevertheless, one should not forget that credit cards have two main disadvantages that are fraud and fees. While choosing the credit card, the decision should be based on the ability to repay credit debt, not just the wish to buy something at the moment (Preston Credit 5).

The person will spend less money when paying in cash and he or she will be able to use cash without any fee. At the same time, with cash the use of the online store is nearly impossible, as well as buying something that one wants. To sum up all the advantages and disadvantages of the ways of payment, it becomes clear that it is up to the person to choose what way of payment is better. It also depends on the status of the person. Some people do not count their money, so that they can make the purchases online and right away, they do not care about any fee possible. Some people count every coin. They are not able to buy something expensive right away and to pay later, because they have the particular tight budget. 

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