Why Use Cash?

Back in my teens and early twenties, Mom used to yell at me about not carrying enough cash. She envisioned me running out of gasoline and not being able to get home. At the time, I didn’t have credit cards so it was a valid concern. Either I would be walking or using my last quarter in the pay phone to call home and beg someone to come get me.

As an adult, I use both cash and credit as well as checks. If I buy anything online, I use credit. My reasoning is that there is at least some protection if the item or service ordered is not what was advertised or in the end is not provided. I do use cash mainly for transactions of $50 or less as I don’t like to carry around a lot of loot (except when on vacation)!

Here are the reasons I use cash.

There is no chance for your personal information to be stolen.

With the rash of data breaches at some of the major retailers in the past years, consumers are becoming more wary of flashing their debit and credit cards at brick and mortar stores when they could be using cash.

You probably will spend less.

If you know you can only buy up to the limit of cash you are carrying, you will be more careful about what you are buying.

Your purchases cannot be easily traced.

Unless you provide the store with a store card to identify you and what you are buying, your purchases are not traceable back to you. There is so little privacy left in the world today that some of us like to hang onto the little bits we still have.

Sometimes you get cash discounts.

Occasionally merchants will discount the price because they don’t have to pay the credit card fees on your purchase. Gas stations, some hotels, some restaurants are examples of places you might negotiate a cash discount.

Cash is almost universally accepted.

In 2008-2009 when we had the credit crunch and recession, there was at least one day when stores were not accepting credit. That day the entire credit system nearly collapsed. If you didn’t have cash to spend that day, you may well have been stranded out of gas.

You’ll never be declined when using cash.

Some places do not accept credit cards.

We took a day trip to a small town in our area several years ago with our grown son and daughter-in-law. Because we drove, they were going to treat us to lunch. They had no cash. There was no convenient ATM. We bought lunch. Granted that didn’t act in our favor because we ended up paying, but my point is that we were able to get what was needed so we didn’t go hungry.

There are no transaction fees.

If you use your debit card, and sometimes even if you use a check, you are charged a transaction fee by your bank. There are no fees with cash. Of course this assumes that you didn’t run up fees at the ATM machine getting the cash! I always just go into my bank to get it.

You won’t have to pay for something later that you already used up.

This is a big one for me. When I charge things, sometimes I lose track of how much is on my credit card balance, bringing an uncomfortable surprise at my statement closing. I hate paying for things like dinners out or gasoline weeks after I have eaten or used up the gas. When I was first married, my spouse was in the army. We lived off base and he drove in each day. At the time Army pay was about $2,000 a YEAR. Each month, when he got paid, most of it went to pay off the gasoline credit card charges.

Using cash is seems tougher psychologically.

Negotiators have long known that if you offer someone cash on the barrelhead, they may be more likely to accept less for an item. Conversely, if you are shelling out bills to buy something, it seems hard than sliding that plastic.

Lots of folks still use cash.

According to a survey (the Diary of Consumer Payment Choice) done in late 2012 done by the Federal Reserve banks and reported in Cash Continues to Play a Key Role in Consumer Spending: Evidence from the Diary of Consumer Payment Choice cash is the most used retail payment method.

The article says:

“Not only is cash a very different payment instrument than checks, but consumers choose to use cash more frequently than any other payment instrument, including debit or credit cards. Cash plays a dominant role for small-value transactions, is the leading payment instrument for many types of purchases, and stands as the key alternative when other options are not available. In certain cases, including that of mostly lower-income consumers who lack access to alternative payment options or find them too costly or difficult to obtain, cash is also used for relatively larger-value transactions .”

When do you use cash vs debit or credit or check or other payment methods?



Why Use Cash? — 7 Comments

  1. I use cash when shopping at stores like Target, K-Mart and Home Depot, because their systems are a threat to debit/credit card security. I use credit cards at grocery stores because I’d rather put everything on credit (and pay in full every month). I recently started paying cash for gas because I noticed the price is lower when paying cash. I would rather stick the card in the pump, but cashback is less than the difference in price. I don’t really like using cash, but do so when the reasons seem compelling. I didn’t use to carry cash until I got marketed every time I shopped at Target to get their store card, while in the checkout line. It makes me want to limit my contact with a store when they solicit me when I’m already giving them business.

  2. I never use credit. I only use my debit card if I run out of cash. Fortunately, our credit union doesn’t assess fees on checks or debit cards.

    No matter what, I’m with you, cash is KING! 🙂

  3. Gonna respectfully disagree. I never use cash unless I have to. For me using a credit card pays dividends in many ways. First you have protection in a purchase that goes bad. Instead of having to deal with it yourself and hearing …”that’s unfortunate” from the vendor. You can call you CC company and let them know how you were wronged. More times than not they can handle it right over the phone. In addition, many CC will double your warranty at no extra charge. This worked well for me on several occasions. And lastly there is the excellent record provided by the statement. This provides a good accounting and tally of your purchases. One can even use the prior years statements to compare shopping habits. And this also provides one more piece of documentation should you have an audit or warranty issue and can’t lay your hands on the original receipt. Nope…for me…”Plastic is Fantastic”…

  4. Cash is what my wife and I use for our discretionary spending. Bills, gas, and groceries are paid with debit card (they are “fixed” expenses), but all our weekend “fun” spending is via cash. When it’s gone, it’s time to stay home!

  5. I almost always pay with credit cards. I always pay my balance in full, so enjoy interest free loans each and every month. My credit cards offer rebates from 1% to 5% so that is another source of savings. My statements provide a convenient accounting of “where the money went” and also simplifies and summarizes my tax-deductible expenses. Purchases made with credit cards also frequently offer extra warranties and price matching guarantees. Lastly, there are situations where credit cards are required for deposits…try renting a car, reserving a hotel room or purchasing an airline ticket without one. I still carry cash for the emergencies mentioned in the article, just not as much.

  6. I never use cash or debit unless I really have to. I use credit cards for everything because I like to collect rewards!

    Currently I am using a cash back credit card which returns 1% of my cash back to me. However, I am looking into collecting travel rewards recently.

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