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Spending Cash vs. Paying with Card
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Ian D.
Certified Credit Union Financial Counselor
Posted August 23, 2018
There are benefits to using cash to pay for things when you’re out and about, but it’s becoming less common. That’s because there are some drawbacks to carrying cash that can make using a debit or credit card more efficient, secure, and convenient; however, there is no one-size-fits-all answer to what form of payment is the best. Here are some things to consider as you decide what you’re most comfortable using.
Does it feel like spending money?
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There are varying viewpoints on what helps someone recognize and control their spending. For some, using cash to pay for things helps them realize how quickly they are going through their money. People who feel this way may even second-guess a purchase because they feel the pain of handing over hard-earned cash. For others, using a debit or credit card has become the norm, so any cash in their wallet is seen as extra and is easier to spend since it is not included in their account balance. This type of spender may control their spending by tracking their account balances during the month or setting up electronic alerts when their balance falls below a certain level.
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It can be frustrating when you discover that a place you’ve just arrived to is cash only when all you have on hand is a credit or debit card. By having some cash on hand, you’ll be prepared for situations like this. Additionally, people who carry cash are able to be flexible with paying friends back on the spot for shared expenses and to make purchases when card machines are broken or card processing networks are down. Alternatively, debit and credit cards are widely accepted at most locations, including internationally. This allows people to travel and avoid having to convert currency in some circumstances. Using cards also bypasses the frequent trips to an ATM to withdraw money and with mobile payment options, you could even leave the cards at home! If there is an emergency that results in unexpected expenses, a credit or debit card can be helpful to cover the immediate costs.
Costs and rewards
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Paying for gasoline with cash often comes with a discount now. When paying with cash, you also don’t have to worry about possible interest charges associated with credit cards or overdraft fees sometimes associated with debit cards. On the other hand, when cards are handled carefully, overdrafts and interest can be entirely avoided. As a benefit, some credit cards offer financial rewards for using them, such as cash back. If you’re receiving money back on your purchases and avoiding interest charges, that could be a reward worth considering.
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A potential risk of using credit and debit cards is the exposure of card numbers that could be stolen and used fraudulently. When paying with cash, there is never a risk of your account or card information being exposed. There is, however, a risk that your cash could be stolen from your purse or pocket. If someone were to steal your wallet and all they got were cards, you could block and get new cards relatively easily with minimal impact. Even if the cards were used fraudulently, you can dispute the charges and get the money back in most cases. Mobile payment options and chip cards remove even more risk when using a card.
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