Canfield Personal Finance Practice Exam 2025 - Free Personal Finance Practice Questions and Study Guide

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What is the primary advantage of using cash instead of credit?

Building credit history

Avoiding debt

The primary advantage of using cash instead of credit is avoiding debt. When you pay with cash, you are spending only the money you currently have, which helps you stay within your budget and avoid accumulating debt. This can prevent you from facing high-interest charges that often come with using credit cards or loans. Furthermore, using cash can promote disciplined spending habits, as physically handing over cash can make you more aware of your purchasing decisions compared to swiping a credit card. By relying on cash, you can effectively manage your finances without the pitfalls of borrowing beyond your means.

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Earning rewards

Getting lower interest rates

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