Buying Your Dream Gadget Using Cash Vs. Using Credit

With Techtember being done just over a week ago, a plethora of new gadgets have once again been announced by our favorite tech companies. Deciding how to upgrade to the latest phone or smartwatch can be a financial question to quite a number of people–Do you pull from your savings and buy with cash for peace of mind, or do you embrace credit-based purchases?

Both have their own pros and cons that will have an effect on your finances. Here are some.

Paying with cash

Pros: No interest payments
One of the most important advantages of buying a gadget with cash is that you need not worry about any interest charge. When you pay the full amount upfront, you avoid additional costs that credit payments usually incur, making the gadget more affordable in the long run. Be sure to check with your gadget shop, because you may also be entitled to certain discounts when buying with cash. This also means you truly own the gadget from day one, with no debts or financial obligations tied to it.

Cons: Immediate financial impact
While avoiding interest payments is a plus, paying for a gadget in cash leaves a large dent in your finances. You’ll need to part with a substantial sum of money within seconds, which could put a significant strain on your available cash reserves.

This may limit your ability to make other important purchases or your emergency fund, unless you actually saved up for the purchase.

Paying with credit

Pros: Payment flexibility
Buying a gadget on credit provides payment flexibility to your pockets. You can spread the cost of the gadget over a set period, often in manageable monthly installments, should you not incur any penalty from late payments. This can make high-end gadgets more accessible, particularly if you don’t have a large lump sum available. It allows you to enjoy the gadget’s benefits while preserving your immediate cash flow for other expenses or investments.

Cons: Interest charges
The primary disadvantage of buying a gadget on credit is the additional cost in the form of interest charges. Most credit agreements involve interest payments, which significantly increases the total amount that you’ve paid for overtime. This means that, in the end, you may end up paying considerably more for the gadget compared to its cash price. Additionally, the interest charges can impact your overall financial health, especially if you have multiple credit purchases or high-interest rates.

Whatever choice you make for buying that dream gadget, make sure that you know what you’re getting into, be it losing a huge amount of money upfront, or the interest charges should you opt to pay with credit. Either way, only buy what you don’t need when you have the resources to purchase it comfortably. (GFB)