Weighing the risks of credit vs. cash

7:25 PM, Jan 9, 2014   |    comments
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KUSA - Target's troubles this past holiday season reminded us that there are risks to using credit and debit cards. But before you give them up altogether - know that cash also comes with its own risks.

If your wallet is lost or stolen with cash stashed inside it, odds are you'll never see that money again. But if it was filled with credit cards - just call your card company to cancel the cards. Many credit card companies are just a phone call away - 24 hours a day.

Stolen debit cards can be trickier because when a purchase is made the money comes directly out of your bank account. Get ahold of your bank as soon as possible.

With cash you don't have to worry about breaches with credit and debit card data. Widespread breaches like the one Target had in late 2013 alert everyone to go back and monitor their statements. But smaller breaches of credit often go unnoticed.

If you don't take the time to look at every charge on your statement - you could have missed a charge that isn't even yours. Hackers are sneaky. Sometimes it's just a small charge here and small charge there. There are countless opportunities for hackers to obtain your credit card data.

If your money is important to you, it's important to make the time to review your credit card statement every single month. Online tools even make it convenient for you to monitor your account every day.

If you see a charge that's not yours - report it to your credit company immediately. Your card company will usually investigate on your behalf. It's a service that offers you peace of mind and doesn't cost you a thing.
Plus, if you're not happy with something you bought and can't get your money back from a merchant, you can dispute the charge with your credit card company. Not with cash.

Once you take the steps to avoid losing money, it's also important to save by spending wisely. Budgeting is key. If you want to properly budget - a credit card makes it easier than if you use cash.

Look at your paper statement - or check it online regularly. Some credit card companies even break down your purchases into categories, which allows you to see how much you have spent on things like gas, food and clothes. If you pay with cash you just have a pile of receipts, which can make it more difficult to track your purchases and keep tabs on your spending.

If anonymity is important to you - nothing beats cash. Using paper tender doesn't leave a paper trail.

Related story: What it costs to use cash in America

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