8.5 cash, debit, or credit?
Personal Finance Portfolio: Part 6
Note: This is one part of a Personal Finance Portfolio in the course that we will be working on throughout the semester. The completed portfolio will count 10% of your final grade.
This Personal Finance Activity will help you understand the pros and cons of using cash, debit cards, and credit cards. This activity will also help you to decide which ways of using money are best for you and why.
Read the following scenario, complete the chart, and then answer the questions.
Imagine that you have just gotten a part-time job. You earn about $150 a week after taxes. You have decided to save about $75 per week and spend the rest. You open a bank account and discover that you have several options for how you spend your money. You can withdraw cash from your account and spend it, you can establish a checking account and get a debit card, or you can apply for a credit card and use your money to pay the credit card bills.
What are the advantages and disadvantages of each type of way to spend money?
Create a chart comparing the advantages and disadvantages of using cash, debit cards, and credit cards (MS Word 15KB) similar to the chart below in order to organize your research for answer the questions below. You may want to refer to 5.3 Comparing Credit Card Offers (opens in a new window) for further information. You do NOT need to submit the chart you create for a grade.
Then answer the following four questions. Your answers to these four questions will be graded.
Comparing Cash, Debit, or Credit?Payment TypeAdvantagesDisadvantagesCashDebit CardsCredit Cards
- In what circumstances might you decide to use cash?
- In what circumstances might you decide to use a debit card?
- In what circumstances might you decide to use a credit card?
- What do you think is the best decision for you? Why?