Although many payment choices come down to personal preference for certain types of purchases, it’s better to make a conscious choice. Ask yourself a few questions about the payment and funding method:

Do I have enough cash to cover this?

Cash is real and immediate. When you use cash for purchases, there are no approvals required or interest charged. But when it comes to paying for big-ticket items like a large appliance or a major expense, few people have enough funds on hand to pay in cash.

Will I have the cash soon?

Using a credit card may give you extra time before you have to pay your next credit card bill. If you're using a credit card, it's a good practice to pay your bill in full each month. When using a credit card, be careful because it can be easy to purchase more than you can pay off each month, allowing balances to grow and interest charges to accrue. If you run up high credit card balances, paying off the debt can affect your budget and impact your other financial goals.

  Tip  

With most credit cards, as long as you pay back the full balance within the 25-30 day "grace period", you won't have to pay interest. 

What other funding options do I have?

Loans can be useful for certain purchases or financing needs. A personal loan may be helpful for consolidating debt, financing purchases, funding renovations on your home, or other expenses. Other types of loans may be secured by collateral, such as an auto loan. Depending on the type of loan, it may also have a fixed rate, fixed term, and fixed monthly payment, which might be helpful for your budget.

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