When making purchases, there are other options that you can use aside from cash, which is the traditional form of payment. These payment channels each have their pros and cons, and some have become more widely used during the time of the COVID-19 pandemic.
Whether it’s added security, convenience, or perks, it’s important to look at and consider other payment forms to see if they match your needs. In an episode of FUNDamentals on Plus Network, Registered Financial Planner (US-Based Global Certification) Edric Mendoza discussed and weighed the benefits and downsides of three payment forms: credit cards, debit cards, and virtual wallets.
– Convenience – One benefit of using credit cards is that you don’t have to bring a lot of cash when making purchases, as you can simply bring the card.
– Reward Points – Credit cards also give their users points that they can use to get discounts and redeem rewards, which allows you to save and get other perks depending on what you want.
– Safety – If someone steals your credit card, you can report it and have it cancelled without costing anything.
– Zero % Debt – This means that from the moment that you get your credit card bill until the due date of the payment, you don’t pay additional charges if you settle the payment during that period.
– However, the downside when using credit cards is that not every single transaction involving money accepts credit cards.
– This payment form has similar benefits to the credit card, and is backed by the same organizations.
– Real-time Charges – For those who make impulsive purchases one advantage to using debit cards is that it is immediately charged in real time. Since there is a time period for credit card purchases, it is more difficult to keep track of expenses through this payment channel. With debit cards, since the purchases are charged in real time, it’s easier to keep track of them.
– Security – Aside from convenience, an added security benefit of debit cards is that once it is stolen, the card’s PIN number is still needed before it can be used, which gives an added layer of protection.
– But just like credit cards, the downside to using debit cards is that fewer establishments accept it compared to other payment channels.
– This is the newest payment channel, which Mendoza calls a game-changer, especially during the time of the pandemic.
– Widely Accepted – Compared to credit cards and debit cards, there are more transaction types that would accept virtual wallets, even groceries and sari-sari stores.
– Similar to credit cards and debut cards, virtual wallets are also convenient and also helps against impulsive purchases
– Security – Like debit cards, an added security feature of virtual wallets is that they can only be used if someone has the device, which gives added protection to those who will use this payment channel.
Mendoza recommends to try to find which payment channel suits you best and fits the purchases that you are making. Aside from that, you should also consider the benefits offered by each payment form, such as convenience, security, and how it helps curb impulsive purchases. In the end, Mendoza says that when using these different payment channels, you should ask yourself and determine your weakness, and select the payment channel that helps address it.