Paper or Plastic? Two Ways to Save Money on Groceries

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The average American family of four with two kids under 11 spends somewhere between $647.80 and $1,290.60 per month on food, according to the U.S. Department of Agriculture. That’s quite a spread, and further proof that you can almost spend as little or as much as you want at the grocery store.

The thing is, there are plenty of ways to save on food if you’re willing to put in the effort. Some of the most popular strategies we have talked about in the past include planning your meals in advance based on the weekly grocery store flyer, making a grocery list before you hit the store, trying out discount grocery stores, buying non-perishable items in bulk, and exploring other money-saving food strategies that can help you reduce food waste and cut your food bill in half.

But how much you spend at the store – and how you choose to save on food – is only part of the equation. Why? Because trying to save on food and sticking to an actual grocery budget are two entirely separate issues.

And that’s where various budgeting strategies come into play. Two opposite methods that have grown in popularity- cash-only budgeting and credit card budgeting – can help you save a ton of money on your food bill. But, which one is better?

Cash-Only Grocery Shopping

For the credit-averse, cash-only grocery shopping provides an obvious way to save money. Here’s how it works: You set aside an appropriate amount of money for groceries at the beginning of the month and stash it away in an envelope. Then, as the month progresses, you simply spend your grocery budget until it’s gone. It’s as simple as that.

Although the number of people using cash for everyday purchases has decreased over the years, many people opt for cash-only budgets for their simplicity and accountability — when you run out of cash, you can’t overspend. Here are some of the pros and cons that come with sticking to cash at the grocery store:


  • Cash-only budgets make it impossible to overspend: Setting aside cash for groceries ensures you won’t accidentally overspend. Using cash makes it easy to realize when you’ve hit your limit – you run out of money!
  • Financial awareness: Unlike other budgeting strategies, using cash can make you painfully aware of how much you’re spending, how much you’ve already spent, and how much you have left. Studies have shown that consumers are regularly willing to spend more money — even on the same items — when they use credit cards.


  • Cash-only budgets leave little room for error: Running out of cash early in the month might mean getting by on pantry staples and freezer food for a few weeks.
  • Carrying cash can be inconvenient and risky: If you’re not accustomed to carrying a lot of cash around — say, a monthly food budget of $800 — you may not enjoy it at first. Meanwhile, if your money is stolen somehow, you will have little recourse to get it back.

Credit Card Strategy

If you’re not into carrying cash, you could always consider using credit cards as a way to stay on track. I’ve written about how to create a budget with a credit card before, but here’s the gist of it: At the beginning of the month, you create a spending limit for each of your budget categories, including groceries. Once the month starts, you use your credit card for all of your spending in order to rack up rewards. To stay on track and out of debt, you simply need to track your purchases online and pay your bill in full each month – or several times per month.

Although this strategy might be hard to execute at first, a lot of people learn to love using credit for everyday purchases like groceries. Not only do cards make grocery shopping easier and more convenient, but they also offer some perks as well. Here are some of the pros and cons that come with using credit at U.S. supermarkets.


  • Earn rewards on your grocery spending: The Blue Cash Preferred® Card from American Express, offers more than the standard 1% cash-back on purchases made at U.S. supermarkets. If redeemed as cash back, these rewards can help you save even more on your grocery bill over time. With a monthly grocery budget of $800, even a run-of-the-mill 1% cash-back card will earn you about $100 per year on your grocery spending alone.
  • Convenience and safety: Using credit is generally considered more convenient than using cash. Meanwhile, if your credit card is stolen, you won’t be on the hook for fraudulent transactions.


  • Plenty of room for error: When you use a credit card instead of cash, it is far easier to blow your budget completely. If you’re not keeping track, you could even wind up spending far more than you ever thought possible.
  • Potential for debt: When you use credit, you always run the risk of winding up in debt. Using cash you’ve already earned, on the other hand, makes the prospect of getting into debt impossible.

If you’re considering a credit card strategy for U.S. supermarkets, here is a card you could consider:

Blue Cash Preferred® Card from American Express

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  • Limited Time Offer: Earn a $300 statement credit after you spend $3,000 in purchases on your new Card within the first 6 months. Offer Expires 12/10/2020
  • Limited Time Offer: $0 introductory annual fee for one year, then $95. Offer Expires 12/10/2020
  • 6% Cash Back at U.S. supermarkets on up to $6,000 per year in purchases (then 1%).
  • 6% Cash Back on select U.S. streaming subscriptions.
  • 3% Cash Back at U.S. gas stations and on transit (including taxis/rideshare, parking, tolls, trains, buses and more).
  • 1% Cash Back on other purchases.
  • Plan It® gives the option to select purchases of $100 or more to split up into monthly payments with a fixed fee and no interest.
  • Cash Back is received in the form of Reward Dollars that can be redeemed as a statement credit.
  • $95 Annual Fee.
  • Terms Apply.
  • See Rates & Fees

Credit vs. Cash: Which One is Best?

When you’re trying to save money on groceries, the first thing you should do is create a comprehensive grocery budget. Start by analyzing your grocery spending from prior months to see if there is room for improvement – and room to cut back. After that, all you need to do is decide on a reasonable monthly budget for groceries going forward.

Your final decision involves deciding which budgeting strategy will help you stick to your goals. If you’re afraid of going over budget and don’t mind hitting the ATM a few times per month, perhaps a cash budget would work best. But if you want to earn cash back on your regular grocery spending at U.S. supermarkets — potentially up to $360 a year with a card like the Blue Cash Preferred® Card from American Express — using a credit card budget might be your best bet.

Only you can decide which strategy would work best for your family – and your budget.

What strategy do you use to save on groceries? Do you stick to cash-only or do you try to rack up rewards?

For rates and fees of the Blue Cash Preferred® Card from American Express, please click here.

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Holly Johnson
Contributing Writer

Holly Johnson is a frugality expert and award-winning writer who is obsessed with personal finance and getting the most out of life. A lifelong resident of Indiana, she enjoys gardening, reading, and traveling the world with her husband and two children. In addition to The Simple Dollar, Holly writes for well-known publications such as U.S. News & World Report Travel, PolicyGenius, Travel Pulse, and Frugal Travel Guy. Holly also owns Club Thrifty.