Earlier this week, a colleague of ours communicated his “simple explanation” of why his credit card is his choice method of payment. “It means I don’t have to actually pay for my purchase right away,” he told us, “With every other method of payment, you’re losing money right away. It’s either coming right out of your hands or out of your bank account. By using a credit card, I know that I’ll have the option of paying my credit card company later. It gives me a lot of peace of mind.”
As far as our colleague is concerned, “it’s that simple”. Credit cards are a preferred method of payment because cardholders aren’t actually making any payments at the times of their purchases. Credit cards, it can be argued, provide people with mini loans. They essentially say “Buy this item now, but pay for it at a later date”. Those loans can be of the no interest variety if the balance is paid off before the next payment due date. Or, of course, balances can be paid for over time with interest accruing on the outstanding balances for as long as they exist.
Credit cards, it should be noted, provide cardholders with many other benefits. Among the most favoured are reward points. In stark contrast to cash, credit card purchases provide shoppers with much more than the actual purchased items. The accumulation of points has helped for consumers to book free airline tickets, hotel stays and car rentals just to name a few of the perks that credit card reward points can provide.
Studies show that credit cards are the preferred method of payment.
“In a 2016 survey, payment processor TSYS asked over 1,000 consumers which payment form they prefer,” informs Jason Steele on CreditCards.com, “Forty percent chose credit cards, while 35 percent selected debit cards, and only 11 percent specified a preference for using cash. Consumers’ preference for credit cards increased by 5 percent over the same survey\’s results from 2015, while the results for debit cards fell by 6 percent.”
Debit cards are highly favoured methods of payment as well. Steele goes on to point out that the same survey found that debit cards were the preferred method of payment for smaller, everyday transactions at supermarkets, gas stations and convenience stores. Credit cards were found to be a preferred method of payment for more expensive purchases, including those at department stores and restaurants, and for travel reservations.
“I still use my credit card for small purchases,” mentioned our colleague, “Think about it. What difference does it make? You’re inserting your card and punching in the same digits (PIN code) whether the price is a dollar or a thousand dollars. It all goes on the same bill making it possible to make one single payment to one single company each month. My credit card bill keeps track of my expenses and I never have to worry about not having enough cash on me when I go shopping.”