Home > Personal Finance > 11 Reasons Why Cash Is Still King

Comments 0 Comments

All I wanted was some cilantro and onions, and I didn’t have the money. Correction: I had the money, but it was in my bank account, not in my pocket. The corner fruit market I go to when I need a couple of quick ingredients only accepts cash for small transactions. My plastic wasn’t going to help me.

My wallet was empty, but my husband had a couple bucks in his pocket, so dinner was saved. But the experience made me remember sometimes it pays to have old-fashioned currency on hand.

Not all Americans agree cash is still king. About a third of people in the U.S. never or rarely carry cash, and 34% said they would go completely cashless if they could, a 2017 ING International survey found.

These days, you can use cards or mobile payments for everything, from taxis to paying the babysitter, meaning it’s easier than ever to live without cash. At some stores — such as Amazon’s brick-and-mortar bookshops — paying with cash isn’t an option. But a fully cashless society isn’t here yet, and there are still good excuses for keeping a few bills tucked in your wallet.

Here are 11 reasons why you might want to pay with cash — or at least keep some on hand.

1. It’s Accepted (Almost) Everywhere

Unlike your American Express or Discover Card, cash is accepted almost everywhere. Most merchants in the U.S. happily take greenbacks for payments, even as they refuse to run your credit or debit cards for smaller purchases. Of course, the flip side of the cash-only (or cash-preferred) business is the one that requires you to pay with a card. That’s a perfectly legal practice, and one common in certain industries. So it’s smart to carry both cash and plastic. (Here are the best low-interest cards to consider.)

2. It’s Useful in Emergencies

Credit cards are convenient, until they don’t work or aren’t available. If the power goes out or your wallet is stolen, you’ll be happy you have some paper money tucked in a cookie jar. In fact, the government includes cash on its disaster supplies list, along with essentials such as food, water and prescription medications. Although you shouldn’t hide your life savings under your mattress, $100 or $200 will buy gas or food if the unexpected happens.

3. It Can Save You Money & Hassle When Traveling

You need cash if you’re on the road, especially if you’re venturing abroad. Not only are cards not accepted everywhere, but pockets get picked, ATMs eat debit cards and other misadventures can befall you. Cold, hard cash can get you out of a jam almost anywhere. It’s best to carry a small traveler’s emergency fund on you separate from your main wallet and leave the rest of your cash and a backup credit card in the hotel safe.

4. Your Server Will Love You

You can add your tip to your credit card receipt when you pay the bill for dinner, or you could make your server smile and leave the cash on the table. Your waiter or waitress will be able to collect their earnings right away, rather than waiting for your tip to show up on their paycheck. Plus, restaurant managers sometimes take credit card fees out of tips that show up on cards, which means less for your hard-working server.

Cash is also useful for other tipping situations. The maid or bellhop at the hotel isn’t carrying a Square reader in their pocket, and if you want to tip your Uber driver, you’ll need bills because there’s no way to tip in the app.

5. You Might Get a Discount

Card issuers charge businesses a small fee for processing transactions. Some businesses pass the charge on to customers in the form of an extra fee. Others, especially in states where such surcharges aren’t allowed, offer cash-payment discounts. For consumers, the difference is one of semantics, but the point is sometimes cash will save you money. Cash discounts are especially common at gas stations in certain areas, where you’ll usually save 5 to 10 cents a gallon if you pay with paper rather than a card.

Gas stations aren’t the only ones cutting prices for those with greenbacks. Doctors might slash bills for uninsured patients if they can pay their bill in cash. Jewelry stores might also offer cash discounts.

6. You’ll Spend Less

Do you really spend more when you pay with plastic instead of cash? Studies say yes. Researchers at MIT found people who were told to use a credit card instead of cash were willing to pay more for purchases. Another study found people paying with cash were more likely to focus on an item’s cost, rather than its benefits. In a third study, consumers who were urged to pay cash for small purchases had less debt after six months than those who didn’t receive the same advice.

7. You’ll Enjoy Your Purchases More

Not only will you spend less when you pay with cash, you’ll also get more enjoyment out of what you buy. We have greater emotional attachment to purchases we make with cash than those we put on credit, a study published in the Journal of Consumer research found.

8. You Won’t Run up Debt

If you’re one of the many Americans who have trouble using credit responsibly, going cash-only has a significant benefit: You won’t be able to run up more debt on your cards. Give yourself a cash budget for the week and stick to it. If the money isn’t in your wallet, you can’t spend it.

9. It’s Perfect for Certain Types of Budgeting

Some people give themselves a cash budget to control discretionary spending, but they still use cards for other purchases. Others go all-in with cash, switching over to what’s commonly called the “envelope system.” Popularized by author Dave Ramsey, this approach to budgeting involves dividing all your money for a month into different envelopes — say, $400 for groceries, $200 for gas and $100 for lunches at work.

You only use money from the grocery envelope to pay for groceries, and when it’s gone, it’s gone. The rigidity of the envelope system doesn’t appeal to everyone, but for those trying to live within a strict budget, it works.

10. Your Bad Credit Won’t Be an Issue

So reckless credit card use or other financial problems have tanked your credit score. That means you’ll pay a premium in the form of higher interest next time you need to borrow money. But if you can pay cash instead, you can minimize or avoid the bad-credit penalty. (Not sure where your credit stands? You can view two of your credit scores for free on Credit.com.)

Use hard currency for your next used car and you won’t have to deal with crummy loan terms. At the furniture store, you might not qualify for the special financing, but showing up with a wallet full of $100 bills could earn you an even better deal: a cash discount.

11. Your Purchases Stay Private

There’s a reason criminals like to do business in cash: It’s hard to trace. But even law-abiding citizens who value their privacy appreciate the anonymity of cash transactions.

Aside from the possibility of identity theft, credit card companies and retail stores sell your purchase data, which marketers then use to try to sell you more stuff. In one infamous case, a teen’s purchases at Target clued the store in to the fact she was pregnant. The chain then sent the mom-to-be some coupons for baby stuff, much to the surprise of her parents.

The Cons of Paying With Cash

Cash has advantages, but there’s a reason most of us don’t rely on it exclusively. For one, it’s difficult or impossible to use it in certain situations. If you want to pay cash for your plane ticket, you’ll need to make a special trip to the airport, and renting a car without plastic is difficult.

There are drawbacks to cash that go beyond inconvenience. Cash can be lost or destroyed. You won’t get perks, such as purchase protection, that you get with some credit cards. Rewards points are nonexistent, and some people find it harder to keep track of cash purchases than those on cards. The disadvantages of sticking strictly to cash are enough to make a hybrid solution — cards for some purchases, cash for others — the right choice for most people.

This article originally appeared on The Cheat Sheet.  

Image: LarsZahnerPhotography 

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team