Spending with Cash, Debit, Credit Cards, E-Wallets
Let’s start with a story
Once upon a time, the society earns a living by the trade that they are born into. Some plant vegetables, some herd sheep, some mine for materials, etc. How anyone gets what they don’t have is via the “Barter System” of exchanging what I have with what you have.
While society happily goes through the barter system, a problem slowly creeps up. How do we determine that 2 chickens is worth a cow? Or a bunch of carrots can be used to trade for steel? The value perception is too subjective. This is in addition to a whole slew of other issues such as the mismatch of wants, where a blacksmith needs bread, but the baker doesn’t need his services or tools.
Thus it was introduced the “Currency System” to mitigate all the issues presented in the Barter System. This system takes a common agreed item to be used by society in general when exchanging for goods or services. It evolved through the ages from small trinkets, to coins of copper, silver and gold, to our current system of “Money”.
Spending in the 21st Century
In our current society, the Currency System has been well-established and deeply ingrained in each of us that value of goods and services and more is tied to “Money”.
The variety of ways we have in our disposal to spend has evolved as well with the advancement of the financial system and the digital world.
As consumers, it is important to be educated on these so as to make the most of each buck that we spend. The 4 main ways of spending:
- Cash
- Debit Card
- Credit Card
- E-wallets / Digital wallets
Cash
The mainstream way of spending for decades. Even nowadays I hear people saying “cash is king” and “keep more cash”. It’s straightforward to use, where you can just use cash to exchange for the goods and services you want.
Nowadays, it is easier to pay using cash via online transfers from one bank to another. No fees charged at all!
This remains as one of my least liked method of payment. However, due to the necessity of having to pay in “Cash Only” places, I’ll keep a minimal balance in my wallet.
Debit Card
An invention whereby one does not need to carry more physical money and can pay using a debit card as long as there is a card terminal around.
This is equivalent to using cash and presents a convenient method to the Cash Supporter.
I don’t use this at all. It has no benefits in usage compared to that of its cousin – credit cards.
This is very useful, though, if the spender has trouble keeping track of and controlling the spending.
Credit Card
I have professed in my other post here about how much I love credit cards, and to some extent why I do so.
Credit card is a champion when used in place of a debit card, which is used as if it is cash. The outstanding balance is cleared and paid off by the end of every month or when the payment due date is.
Credit card can be a pain in the *** when used as a loan or misused by not repaying on time. It fetches one of the highest interest ever in loans of 18% per annum. This will only add to anyone’s financial burden, and not by a small quantum.
So why is this better than a debit card? Solely because of the benefits that credit cards offer, be it in points or in cashbacks.
In using a debit card or cash, we spend and we get the goods in return.
When using a credit card instead, we spend and we get the goods (+ points / cashback) in return. I guess you can see it as a discount in that we’re not really paying the full price for the goods.
For Malaysians, in choosing the suitable credit cards for our spending patterns, we can visit Ringgit Plus or iMoney or Compare Hero or Loan Street.
BONUS! If you apply a new card through these platforms, you may be eligible for some decent freebies that comes with it as well! So, why not?
I am more into cash back credit cards nowadays because essentially I get more back compared to points. Typically points translates to a 1% – 2% conversion, but cash back cards could offer up to 10% for some.
E-Wallets & Digital Wallets
In the digital age, e-wallets have taken the world by storm. If you have the chance to go to China, you will notice that payments will be done via WeChat Pay or AliPay. If you give them cash, they may spit on you! Just kidding. But, seriously, this is how advanced the payment system in China has transformed.
In Malaysia, we have multiple options for these digital wallets as well. They have grown to a certain size and whilst it has not evolved to the way it is in China, there are many places that can be transacted using digital wallets now.
The two that I use are GrabPay and Touch ‘n Go eWallet. But, I have Boost and BigPay as well.
At one point, there were a lot of rewards of usage of these digital wallets – mainly my favourite cash backs. However, nowadays it has deteriorated to a point that I don’t really like using them already.
I use GrabPay mainly and they still give decent points back. Touch ‘n Go eWallet mainly contains funds so that I can go through the RFID tolls on highways. BigPay is only used if I need to spend overseas as it gives one of the best forex rates, but with the COVID-19…
There is one additional perk in using digital wallets though. I use credit cards to reload my digital wallets, and in that I will gain points or cash backs too. See why I love credit cards? ๐
The Way I Spend
Evidently, I encourage smart spending, which fetches the most out of every dollar that I spend.
Regardless of where I am spending, I prioritise using credit cards or digital wallets before resorting to using cash.
I do not in any way use debit card because if the merchant accept cards, it’s going to be credit card.
Let’s all be smart spenders!
Demand a return even when you’re spending and your every buck will take you further.
