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Column: Cash, debit or credit?

Which credit card is the best bang for my buck? I’m asked this question often as credit card offers pile up in mailboxes everywhere.
When it comes to deciding on cash, debit or credit, there is a lot to consider, says Heather Tarnopolsky.
Which credit card is the best bang for my buck?

I’m asked this question often as credit card offers pile up in mailboxes everywhere. After all, if we’re going to spend our hard earned money, shouldn’t we be rewarded by the card company of our choice?

Cash rewards or air miles? Redeemable points or free groceries? The list goes on and on. Simply put, no matter how good a card offer appears to be, it really has everything to do with the consumer behind it.

As we all know, credit cards are only one form of payment and sometimes it can be difficult to determine the best method of choice for your spending habits. For this reason, I’ve provided a comparison of each to consider before making that purchase.


Cash is tangible. If you’ve ever saved an envelope of bills or a jar of change, you know the feeling it brings to witness your savings pile up. Cash is a widely accepted form of payment. If a venue doesn’t accept your credit card type, you can almost always be sure they’ll take your dollar bills.

Cash keeps your budget in check. Leave the plastic cards at home and pocket the amount of cash needed to meet your grocery budget. This is a no fail approach to staying on track.

On the downside, cash can be misplaced, stolen or accidentally destroyed. Unlike plastic cards, once it’s gone there’s little chance of getting it back.


Debited purchases provide an immediate record of spending to reference later through a banking system. Rather than sorting through numerous receipts, viewing your transaction history can be easiest when tracking purchases for budget reasons.

Unlike cash, banks provide insurance on account balances through the Canadian Deposit Insurance Corporation. It’s worth looking into to see how your purchases are protected when you use your debit card.

Using your debit card forces you to be a conscious spender, not an impulse buyer. You must always be aware of your account balance as well as automatic scheduled withdrawals. This is an effective approach to money management.

On the other hand, stay away from overdraft protection; it is no different than dipping into your credit card. Also, research bank account fees to ensure you’re paying fairly based on your spending habits.


Credit cards can be an attractive alternative to cash or debited transactions, but don’t be fooled by all the bells and whistles they seem to come with — unless you’re an extremely disciplined spender.

Besides the awards programs many cards have to offer, credited purchases help build your credit. Every month that you pay off your card balance, you are improving your credit score. Your credit score can be a major deciding factor when applying for financial products down the road, whether it be a mortgage or car loan.

Similar to your bank’s debit card, credit cards also offer a neatly organized summary report of all purchases and transactions each month. This provides an easy reference guide when working on the budget.

Unfortunately, using a credit card can be tricky if you’re not careful with your spending. Interest accumulates beginning from the day of purchase, but that interest is not added if your card balance is paid off within a month’s time.

Carrying a card balance from month to month can create a snowball effect of credit card debt. Bottom line: don’t spend money you don’t have.

Those are the facts. Choose one that best suits your spending habits and budget needs and track purchases regularly to be sure you are living within your means.

Heather Tarnopolsky is a Sun Life Financial advisor in Greater Sudbury.