Advantages and Disadvantages of Various Methods of Payment

Cash, coins, gift certificates, checks, and debit and credit cards are all forms of payment.  Cash, coins, and debit cards are various payment forms that are immediate payment to sellers for items.  You provide access to the money immediately.  Gift certificates are provided when payment is given to vendors first before an actual item is chosen or bought.  Vendors or sellers have access to the money immediately before releasing inventory.  

Checks are a piece of paper that shows payment for an item.  The check is taken to the bank for transfer of cash to vendor or seller for an item bought.  There can be a delay of a few days for the transaction to finalize.

Credit is not money but is actually a loan.  When you sign a credit card slip, you are signing that you agree to pay back the money at a later date.  If the money is not paid in full by a certain date, interest is added to the amount owed.

Choosing a credit should be like choosing any other goods or services.  You should shop around and compare different credit cards before making a decision. Keep in mind this is a loan and should be considered an opportunity with a cost for the ability to purchase an item and enjoying the use of the item while you pay back the charge for purchase.

Look at the table above.  List some advantages and disadvantages for each type of payment.  When you have finished completing the table, submit your list using the Submit Assignment button.

This lesson has been adapted from the Virtual Economics CD from the National Council on Economic Education on July 15, 2014.