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CASH VS.

CREDIT CARD

Today, we live in a materialistic world full of people who only live for the purpose of
money. But there is a saying that money cant buy you happiness. Unfortunately, without the
influence of money, we cannot survive in the society today. On the contrary, people in Africa
and certain parts of the world experiencing hunger and live a total opposite life from those in
the higher class. Food for thought, in every 10 minutes, 300 people around the world die of
hunger.

Citizens in developed countries such as Japan, America, and Europe have been
abusing the use of credit card while some still struggle to survive their day. It all comes back
to the question, Cash vs. Credit Card. Which side are you on? Cash or creditthe million-
dollar question. As far as everyone can tell, no one has published a cradle-to-grave analysis
of either a dollar bill or a credit card.
(Funny, the financial industry must
have other things on its mind.)

So we'll have to do the best we


can with some back-of-the-envelope
calculations. Of course, the question of
cash-vs.-credit is just a fig leaf for the
real issue when it comes to spending
and sustainability: our national love of
buying a lot of crap. Since credit cards encourage us to spend beyond our meansand our
needsyou could argue that they'll always be the least environmentally friendly choice. Are
you capable of controlling your spending with credit cards? Have you tried only using cash?

To be fair, plastic is much sexier than a piece of coloured paper with a dead president
staring vaguely into the distance. Some banks even allow you to customize the graphics that
appear on the credit card/debit card or choose from a range of designs and colours the
company is marketing.
History of Cash
In common language cash refers to money in the physical form of currency, such as
banknotes and coins. In bookkeeping and finance, cash refers to current assets comprising
currency or currency equivalents that can be accessed immediately or near-immediately (as in
the case of money market accounts). Cash is seen either as a reserve for payments, in case of
a structural or incidental negative cash flow or as a way to avoid a downturn on financial
markets.

In Western Europe, after the Collapse of the Western Roman Empire, coins, silver
jewellery and hack silver were for centuries the only form of money, until Venetian
merchants started using silver bars for large transactions in the early Middle Ages. In a
separate development, Venetian merchants started using paper bills, instructing their banker
to make payments. Similar marked silver bars were in use in lands where the Venetian
merchants had established representative offices. The Byzantine Empire and several states in
the Balkan area and Russia also used marked silver bars for large payments. As the world
economy developed and silver
supplies increased, in particular after
the colonization of South America,
coins became larger and a standard
coin for international payment
developed from the 15th century: the
Spanish and Spanish colonial coin of
8 reales. Its counterpart in gold was
the Venetian ducat.

In the early part of the 17th century, British East India Company coins were minted in
England and shipped to the East. In England over time the word Cash was adopted from
Sanskrit karsa,[dubious discuss] a weight of gold or silver but akin to Old Persian karsha,
unit of weight (83.30 grams). East India Company coinage had both Urdu and English
writing on it, to facilitate its use within trade. In 1671 the directors of The East India
Company ordered a mint to be established at Bombay, known as Bombain. In 1677 this was
sanctioned by the Crown, the coins, having received royal sanction were struck as silver
Rupees; the inscription runs The Rupee of Bombaim, by authority of Charles II.

At about this time coins were also being produced for The East India Company at the
Madras mint. The currency at The Companys Bombay and Bengal administrative regions
was The Rupee. At Madras, however, the Company's accounts were reckoned in pagodas,
fractions, fanams, faluce and cash. This system was maintained until 1818 when the
rupee was adopted as the unit of currency for the Company's operations, the relation between
the two systems being 1 pagoda = 3-91 rupees and 1 rupee = 12 fanams.

Meanwhile, paper money


had been developed. At first, it was
thought of for emergency issues,
hence were most popular in the
colonies of European powers. In the
18th century, important paper
issues were made in colonies such
as Ceylon and the bordering
colonies of Essequibo, Demerara
and Berbice. John Law did
pioneering work on banknotes with the Banque Royale. However, the relation between
money supply and inflation was still imperfectly understood and the bank went under, while
its notes became worthless when they were over-issued. The lessons learned were applied to
the Bank of England, which played a crucial role in financing Wellington's Peninsular war,
against French troops, hamstrung by a metallic Franc de Germinal. The ability to create paper
money made nation-states responsible for the management of inflation, through control of the
money supply. It also made a direct relation between the metal of the coin and its
denomination superfluous.
History of Credit Card
A credit card is a small plastic card issued to users as a system of payment. It allows
its holder to buy goods and services based on the holder's promise to pay for these goods and
services. The issuer of the card creates a revolving account and grants a line of credit to the
consumer (or the user) from
which the user can borrow
money for payment to a
merchant or as a cash advance
to the user.

A credit card is different


from a charge card: a charge
card requires the balance to be
paid in full each month. In contrast, credit cards allow the consumers a continuing balance of
debt, subject to interest being charged. A credit card also differs from a cash card, which can
be used like currency by the owner of the card. Most
credit cards are issued by banks or credit unions,
and are the shape and size specified by the ISO/IEC
7810 standard as ID-1

The modern credit card was the successor of


a variety of merchant credit schemes. It was first
used in the 1920s, in the United States, specifically
to sell fuel to a growing number of automobile
owners. In 1938 several companies started to accept each other's cards. Western Union had
begun issuing charge cards to its frequent customers in 1921. Some charge cards were printed
on paper card stock, but were easily counterfeited.
PROS AND CONS OF
CASH

Cash, whenever we say its name, somehow we get happy all about it. It brings
happiness to most peoples life while to some it brings misery. Well, everything in this world
has its own pros and cons. For most teenagers today, we have to keep ourselves in trend with
the fashion world. Girls especially will spend hundreds and thousands to shop online without
budgeting to make themselves look presentable to others.
Using cash simplifies budgeting, since you can just look at the cash in your hand to
see what's left instead of looking at an online registry or calling your card company for a
balance. In addition, when you use cash, you have to do math mentally in order to make
change and complete your transaction and thus encourages arithmetic development.

Now lets look at the advantages and disadvantages of cash.

From the view of many, cash is free. You do not have to pay for any additional fees
with cash such as interest, finance charges, and annual fees. Not only that, CASH is light and
fast. Why is it so? CASH does not weigh down your jacket nor cause bulges in your pocket
and does not need a PIN code when paying with CASH.

Unlike credit cards, we might be afraid of someone peering knowing our password.
Dont forget, CASH is
always right. With CASH
you always have the right
amount ready. You can
spend it anywhere on
anything.

But nothing remains


good all the time; using
cash too has its
disadvantages. One thing is
for sure, cash is easily stolen. With the increasing number of theft today, no doubt carrying a
large amount of cash around is like digging your own grave.

For expensive products such as Jimmy Choos, Pradas etc, who would want to shop in
these shops carrying a large bundle of cash? It may lose easily. With high advanced
technology, cash can be replicated and counterfeit for ugly purposes. Should we pay in
cash?With the proliferation of plastic alternatives to hard currency, some people consider
carrying cash a throwback.There is also the security advantage with debit and credit cards.
Debit cards are protected by your personal identification number (PIN) and credit cards by
your signature (and for some cards, a PIN number too). Cash is only protected by your ability
to defend it should someone else want to take it from you. Moreover, cards are as widely
accepted as cash - with the exception of a few mom and pop shops. And yet, from a personal
finance view, cash is almost always the better choice for making a purchase. One of the
drawbacks of credit and debit cards is that they encourage you to spend more than you intend
to by giving you easy access to more capital. With cash, spending more than you intended
requires going to a bank or ATM to get more and then going back to the store to complete the
purchase. For most people, this provides time to reconsider whether their budgets can handle
any extra strain.Generally speaking, only carrying the cash you are prepared to pay for a
given product will prevent you from buying
the next level up and paying for features you
don't need. This works for small-scale
purchases, but buying a computer or a car
can involve large amounts of cash that
probably shouldn't be carried around. If a
check can't be used, a debit card is better
than a credit card because you are spending
money you have rather than money you
don't.

Just as cards encourage overpaying for one item, they also allow you to buy more items
than you mean to. Stores are set up to make products appealing in order to persuade shoppers
to buy more. Sometimes a shopping list isn't enough to protect you from impulse buys.

Only carrying enough cash to buy the things on your list can limit the damage. This is the
best way to keep shopping within your budget. If you are motivated, you will find discounts
or cheaper alternatives to your regular brands to make that cash go further and maybe earn
yourself a luxury item.

Cash, is strictly limited to money you have already earned and is sitting there for you to
use. Using your Visa to take a cash advance and then carrying the cash with you will not
solve the essential problem of using high-interest debt to cover your expenses.

Cash is as a better alternative to credit cards, no one would dispute it. In contrast, debit
cards seem to enjoy a protected status despite the overkill on ATM fees and foreign ATM
fees. Forgetting the fees, a debit card's main failure is that is trivializes purchases. Being a
square of plastic, it is hard to tell how much of your money is flowing through your debit
card.
For most people it becomes a matter of RM2 here, RM6 there, another RM4 over here
and so on until they give up keeping track of how much has been spent in a day - let alone a
month. Then it's a shock to their systems when the monthly statement comes and it's far too
late to do any good. With cash, you can see the damage as it is done and hopefully curtail
your spending before it gets out of control.

Using a credit or debit card offers more security than cash in most cases. For large
purchases, carrying cash is often not an option and writing a check or getting a bank draft
may be more trouble than it is worth for some. Furthermore, if a debit card is used
responsibly, it is an ideal replacement for cash. A credit card can also be a convenient tool,
but it's only a fair substitute for cash when the balance is paid in full at the end of each month.
Otherwise, your ultimate reward for paying with your credit card will be paying off an even
bigger debt.If you struggle to avoid overspending, shopping with cash is one way to stick to
your budget and limit impulsive spending.
Pros and Cons of Credit
Cards

Today, credit cards are very important in peoples lives and its usage has increased.
However, not paying in cash has also advantages and disadvantages.
The most important advantage of using a credit card is that people do not need to carry
cash with them when they go shopping. What is more, these cards are really useful and
easy to use. Last but not least, using credit cards is not so unsafe as carrying tickets
because nobody knows how much money the card has.

On the other hand, credit cards have some disadvantages. The main drawback is that
people can lose the card and replacing it is not easy. In addition, there are many markets
which do not accept paying with credit cards. Furthermore, people have a tendency to
spend much more money when they buy things with a credit card than doing it in cash.To
sum up, it seems that credit cards usage will go on increasing due to this way of paying
has developed characteristics to be used in different situations.

Making a purchase with a credit card can be exhilarating and rewarding one moment
and regrettable and binding the next. For many, the joy of that tiny square of plastic
monetary freedom becomes a
ball-and-chain of debt faster
than you can say discount sale
at Aeon. Yet others maintain a
responsible, reliable account
that provides a rewarding
experience.To own or not to
ownthat is the credit card
question. Obviously, the magic
of the little plastic card is not
right for everyone. Take a look
at the following pros and cons
for credit cards to decide
whether or not you should make the swipe.

In using credit card there are its advantage such as Credit cards are not nearly as
popular as they are today if they werent so maddeningly convenient. Paying at the store,
is significantly easier with a piece of plastic that takes no immediate bite out of ones
pocketbook.The fact that most major stores (and most minor ones) accept Visa,
MasterCard, and Co. only adds to the handiness of carrying around a credit card. Lunch
tabs and Lamborghini rentals could both be taken care of by a simple swipe. You name it,
and a credit card can purchase it.
Almost all teenagers have a credit card. That reason was good enough to spark digi-
pets, and it is good enough for credit card applications, too. Watching your friends pay for
meals with their HSBC credit card makes you feel pretty worthless when you break out
your Am Bank card to foot the bill for a treat in Indulgence.

Owning your very own piece of plastic provides a sense of belonging, serving as a
platinum membership card into the world of commerce and retail. For college kids,
owning one is a step towards adulthood. For adults, having one makes you feel like a true
Malaysian. Either way, the
pressure to fit in has a big
say in whether or not you
make the plunge.

One of the greatest


parts to credit cards (other
than the personalized
pictures; hello spring break
12!) is reaping the rewards
for your spending habits.
You worked long and hard
to find the last copy of Pirates of the Caribbean bargain bin, and you deserve every
purchase point you get from paying on credit.

Depending on your card, the rewards can vary, but the good news is that there is such
a wide variety of options that you are bound to be able to find the right card to fit your
lifestyle. There are cards that offer plane tickets, sports merchandise, and good old-
fashioned cash. Others build up a stockpile of points for cardholders to use to get
whatever their hearts desire. Ironically, points may be used to achieve Pirates of the
Caribbean DVDs.

Spending has its benefits (new jeans, perhaps), but spending with credit has benefits
that go beyond mere denim. Using a credit cardand using it responsiblycan help
build ones credit score, which could mean a better shot at a loan or a better mortgage
down the road.The key part to using a credit card to build credit is keeping up with
payments. Having a credit card does no good if you fall behind on payments or rack up an
unconscionable amount of debt. Acting responsibly on your account, however, will help
you build a credit score that reflects dependability and accountability.

Having to think of the cons, By far, the most dangerous part of credit cards is not
paying them off on time, and for many, this problem is a constant temptation despite its
obvious negative consequences.

Once you fall behind by one


payment, the climb back to a debt-
free account becomes harder and
harder. Late fees, interest, and
penalties build faster than you would
believe, and you may find yourself
making monthly payments that only
cover your charges and dont even
touch your principal purchases.

Often as a result of late payments, many people find themselves sunk in credit card debt
with no way out. Credit card companies are great at getting customers in the door, but
once you fall behind with payments, the companies make it nearly impossible for you to
climb your way out. Between fees and charges and piling interest, the matter seems to
continually get worse, not better.

The disadvantages to not paying on time are innumerable, and the odds of staying debt-
free are not in your favour.

Many times, credit card companies will say or do whatever it takes to get you to sign your
name on their application. Of course, once that ink has dried, theyll suddenly remember
to tell you about start-up fees and processing fees that you never saw coming.

Annual fees are a big one, too. That credit card that earns you frequent flyer miles every
time you buy might seem like a good idea, but for RM100 a year, the right to own it may
be too much.
Always check the fine print of a contract before you sign and ask if there are any extra
fees. The free t-shirt just for signing up might be nice (and long-sleeved!), but the RM50
paperwork fee isnt.

One of the most overlooked negative aspects to credit cards is the ease with which
cardholders overspend. Really, the psychology behind this is simple. You purchase items
without ever exchanging actual money, so you hardly feel like youre paying anything at
all.

But the joke is on you. Not only do you have to pay for everything at the end of the
month, you may end up paying for far more than you ever intended. Without fail, people
look at their month-end statements and are blown away at how much the charges totalled,
yet when they are out there making their purchases, they think nothing of it.

If you have trouble staying focused on necessities when youre out shopping, a credit card
might mean the difference between purchasing the Guess bag you dont need or leaving it
on the shelf.
CONCLUSION
Now, whats in your wallet? Cash or credit card? You may have both but trust me, either one
is enough to cause you pain in the neck. In my case, I would very much like to prefer cash
rather than credit card. Why? No matter how much the banks charge on credit cards, that
piece of plastic that we hold almost every single day never goes away. It is stuck to us for a
lifetime. Unlike the cash we earn, we would learn how to appreciate it much more than just
swiping those credit cards. People could never understand how money can influence ones
life until a certain circumstances come hit them in the face. But having a charge card is a
common phenomenon for modern people. Banks promote their application programs of credit
cards on commercials every day with slogans like, Dreams Come True, or Give Yourself a
Chance to Success. Paying things by credit cards is convenient, because you do not have to
bring cash with you. Besides, credit cards are easy to apply for. The little plastic thing would
not cause serious social issues if a complete system is built. However, I do not agree with this
kind of paying tool.
I will never refer to the policy which allows students to have their own credit cards.
Since the qualifications for applying for a plastic card have become lower and lower, banks
even promote the project for the Student Credit Card. If you are eighteen years old, have
the parents agreement, and prove that you are capable of paying the money back every
month, then you are qualified for the application. It does not sound very easy because you
must have a job before you apply for it; however, according to the survey made by the
Ministry of Finance, R. O. C, only less than half of parents knew that their children have a
credit card or even more than just one; what is more, the credit line fifty thousand ringgit
which offered by banks at present is more higher than the constitutional twenty thousand
ringgit. The situation is getting out of control; most of students cannot pay the money back. I
think it is going to provoke some social problems as they hold liabilities before they graduate
from school.
Another reason for people to abandon the credit card is that people may not be able to
pay back the money which they borrow from banks stably. Before applying for a credit card,
people would set a line or to limit a budget for them, so it might be safe to pay in this way;
however, in fact, things never come out as perfect as we think. Since some unanticipated
situations take place, paying things by credit cards is totally a different circumstance from
paying by cash. Try to image that, there is something at a shop you want to buy which is cash
only, and it will cost you six thousand ringgit. The hesitation must be much stronger than
paying by a credit card, because if you choose to pay by cards, it requires only to sign your
name on the bill without seeing the cash fly away from your wallet. You may ask what if
there is something necessary to buy but you do not have enough money on hand to pay the
bill; for instance, you really need the air conditioner or furniture? People normally do not pay
those things by cash, yet here is a better solution to solve the difficultypay by instalments.
Of course, it is not the instalments with credit cards, because it only burdens your load
circularly.
The objection to the prevalence of the plastic card is crucial, because the more
prevalence the plastic money is, the deeper people will get involved in it. Those who choose
to own the credit card often intents to build up a good credit, train themselves to control
spending, or form a good spending habit; nevertheless, the feedback happens only after you
have regulated yourself successfully while using the plastic money, which means without
getting caught by the sky high interest rate. In actual reality, some car holders keep
accumulating their debts instead of cutting back their spending as their beginning idea. Take
my twenty-five year old sister and my brother, who is thirty years old now for example. They
think that they are mature enough to make good use of the plastic card, and things would not
go wrong if they employ it cautiously, yet both of them are being chased by bills every month
afterwards; however, in spite of suffer from the breathless ordeal, they still cannot quit it.
When do these people take a breath? Life can be loathsome and despairing if we always
encumber with debts.
It has been a popular issue recently, whether we should hold a credit card on our hand
or not since the bank has increased the interest rate higher and higher. I think there are more
disadvantages than advantages in it; therefore, the abolishment for the credit card is
necessary.
Therefore, it is for me to say that cash is indeed much better than credit card in many
aspects. Learn to embrace and appreciate the love of money instead of misusing it. Who
knows, money can bring you happiness?

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