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Cash or Credit: Which One Is Best for Day to Day Purchases, and Why?

Written by prositesfinancialJan 7 • 4 minute read

With so many credit and debit card options available to us these days, why would anyone still choose to use cash? Well, there are actually quite a few very legitimate reasons to use cash, even today.

Paying with Cash Significantly Reduces Your Odds of Having Your Identity Stolen by Hackers

Believe it or not, $16 billion was stolen from Americans in the form of credit and debit card info theft in the year 2016 alone, affecting 15.4 million people! So, as secure as we may wish to believe that these plastic cards are, the truth is, they just aren’t.

Every time you swipe or insert your credit or debit card, either online or in person, you are putting it out there again, transmitting it again, and in many cases giving it to yet another company. These companies then must store and or transmit that information securely, and oftentimes they are not quite up to the task, with hackers getting better and better by the year and many companies using outdated or even obsolete security technologies and methods for years on end.

This perfect storm of security factors has led to many of the major data breaches of recent years, even affecting Fortune 500 companies and several prominent retail chains, such as Target and others.

Cash Can Often Save You Money.

With a lot of retailers, cash is king, even today! Merchants like to see the money, and that hasn’t changed much. If you’re ready and willing to pay cash, many retailers will give you a deal that they wouldn’t otherwise give you had you been using a credit or debit card, or other electronic payment option, to pay. This is especially true of larger purchases, such as cars.

More importantly, cash makes your money tactile again. You actually feel it when you spend money, and you see the cash draining from your wallet. It may sound funny, but the sight and the feel of spending money is lost when you spend with credit or debit cards, and it is a widely known fact that this results in far higher spending habits.

Further, when you spend with cash you don’t pay interest on the credit cards, and you can’t accidentally overdraft your bank account, resulting in hefty overdraft fees and a further damaged budget, not to mention possible issues with both your own bank and any future banks you may wish to open an account with.

Credit Card Rewards Are Always Better for the Company Than They Are for You.

While all those enticing credit card rewards may seem very appealing, the reality is that the credit card company would never have offered them to you in the first place, were they not absolutely certain that you would spend for more money with the credit card than without it, and pay far more in interest and fees than they will ever pay out in the form of rewards. This is why credit card companies offer rewards: to make as much money as possible off of as many people as possible by offering them an enticing form of bait that is hard to pass up. Don’t be a sucker!

In Many Cases, Cash Is More Convenient.

Whether it’s paying your local contractor or plumber, buying some Girl Scout cookies at your door, helping homeless person, or just making a run to the convenience store for some odds and ends, hey can often be more convenient to use cash spend to get out of credit or debit card. And more importantly, you most likely aren’t rocking up any debt or spending outside your budget if you are using cash.

Major New Purchases Become Hassle and Interest-Free.

When you stop using credit cards to pay for everything, you’ll find that major car repairs, new furniture purchases, and family vacations are no longer still sitting on your credit card statement several months later, accruing massive interest. Each purchase is paid for entirely in cash, and that’s it. It’s over. You aren’t getting bills and statements for months on end, causing you headaches and hassle, not to mention all that interest you would’ve paid! Without all that debt to worry about, you are then free to focus on the present with your money rather than on the past. This sort of freedom leads to increased peace of mind about your finances.

You Learn to Spend Only What You Have When You Spend Cash.

Thanks to the fact that with cash you don’t trust have an unlimited sense of purchasing power, your mentality around buying changes quite dramatically. The first time you empty that dining and below after your first paycheck, you definitely feel it a week later when you want to go out to eat. This may hurt at first, but you quickly change your purchasing habits and learn to stay within your budget, spending within your means rather than beyond.

If Your Wallet Is Stolen, You Can Only Lose That Cash, Not Your Identity.

Many people don’t like the idea of keeping a lot of cash in their wallet and would rather carry credit or debit cards instead. However, the problem with this idea is that in reality if a thief steals your wallet and there is only cash inside, you can only lose that cash. But if a thief steals that same wallet and you have all of your credit and debit cards inside, they have just created a gigantic headache for you and could steal your identity not only in the physical world but also online all over the internet. That is a mess that could take a lot longer to clean up!

Sure, you can make a phone call, and another phone call, and wait on hold for hours dealing with customer service reps in other countries attempting to resolve this massive headache, or you could just be out of cash and on your way without another thought. Usually, having a cash-only wallet stolen is actually far better than having a wallet full of credit and debit cards stolen, as the pain is short-lived and the recovery is quick.

So there you have it: several perfectly good reasons to still use cash, even today in this increasingly digital age. What other benefits of cash vs. credit can you think of that we might’ve missed? Feel free to let us know in the comments below!

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