Why it’s Better to Pay Cash

So, you’ve finally arrived. You’re at the point in life where you actually qualify for (and can afford) credit. Your score is over 700, and you’re rocking. Everywhere you turn, someone offers you a credit card or a personal loan, and you’re more than willing to say “yes, please!”
Still, there are compelling reasons why you should sometimes say “no.” Credit is nice to have, but it’s not always nice for you.
Here are some reasons why it’s better to pay cash if you can:
Paying cash means no interest charges. Well, duh. It’s basic, but many people opt for the convenience of credit instead of just paying cash. They fully intend to pay off the balance, but they don’t and then wind up paying interest charges.
Patience is a virtue and it builds character. OK, let’s say you are considering a personal loan to buy a boat. Now, it’s June, so you’re really just on the cusp of the summer boating season. You know you’ll be able to save up enough money to buy that boat in 3 months, but by then it won’t be boating season.
So, you go down to your bank and get a personal loan. Over the life of that loan, you’re going to pay another $3-5 grand in interest, depending on how much the boat costs. If you can wait just one more season, you can pay cash. No, it’s not easy being patient, but it does pay off.
Credit is designed for purchases that you can’t pay cash for. Most folks, no matter how much they save, aren’t going to be able to pay cash for their home. That’s why home loans are important, and that’s why most people use them. On top of that, your home is an investment that may, in the long run, be worth more to you than what you pay on your home loan.
But just about everything else can be bought using cash. Yes, there are some items that you can’t wait to save up for (such as a car). But anything you can pay cash for you ought to.