11 Good Reasons Why Cash Is Still King

cash drawer

A cashier takes money out of the cash drawer. | Joe Raedle/Getty Images

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 that’s my go-to when I need a couple of quick ingredients only accepts cash for small transactions. My plastic wasn’t going to help me in this situation.

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 really does pay to have some 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 38% percent 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 even an option. But a fully cashless society isn’t here just yet, and there are still some 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. will happily take your 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 that’s common in certain industries. So it’s smart to carry both cash and plastic.

Next: When the power’s out, your credit card won’t help you.

2. It’s useful in emergencies

power outage

A business accepts cash-only payments during a power outage in Washington, D.C. | Andrew Caballero-Reynolds/AFP/Getty Images

Credit cards are convenient, until suddenly 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 other 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.

Next: Why you’ll want to carry some cash on your next vacation

3. It can save you money and hassle when traveling

Airplane boarding passes and passport

Smart travelers pack their passport and some extra cash. | iStock.com

Take it from the travel pros at Lonely Planet: 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. Carry a small travelers 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, Lonely Planet advised.

Next: Why you should bring cash the next time you dine out

4. Your server will love you

waitress takes order from table of four

Your server will appreciate a cash tip. | iStock.com/ monkeybusinessimages

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, Money reported, which means less for your hard-working server.

Next: How paying with cash can save you money

5. You might get a discount

gas station price sign

A gas station advertises different prices for cash and credit customers. | Justin Sullivan/Getty Images

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 quickly pay their bill in cash. Jewelry stores might also offer cash discounts.

Next: Discounts aren’t the only way paying with cash can save you money.

6. You’ll spend less

woman takes bills out of a wallet

Studies have shown you spend less when you pay cash. | iStock.com/dolgachov

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 are 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 month than those who didn’t receive the same advice.

Next: Want to love your new sweater even more? Buy it with cash.

7. You’ll enjoy your purchases more

women with paper bags walking in the mall

Your shopping spree might be more fulfilling if you avoid paying with plastic. | iStock.com/shironosov

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 for we put on credit, a study published in the Journal of Consumer research found. “Using cash or check seems to increase the psychological ‘pain’ or sacrifice of the act and creates more affinity with the product or brand,” the authors wrote.

Next: The cash and debt connection

8. You won’t run up debt


Credit cards make it easy to get into debt. | iStock.com

The average U.S. household with credit card debt owes more than $16,000, according to financial website NerdWallet. 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 any more debt on your cards. Give yourself a cash budget for the week, and stick to it. If the money isn’t already in your wallet, you can’t spend it.

Next: Why Dave Ramsey says you should always use cash

9. It’s perfect for certain types of budgeting

American dollars in envelopes

The cash-based envelope budgeting system helps some people control their spending. | iStock.com/K-Paul

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 who are trying to live within a strict budget, it works.

Next: Cash is a lifeline when you have bad credit.

10. Your bad credit won’t be an issue

hand checking poor option for credit score

You won’t have to worry about your bad credit if you can pay with cash. | iStock.com

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.

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. (Even if you can get financing for your new living room set, you probably shouldn’t because these “deals” can wreak havoc on your already fragile credit score, according to Marketwatch.)

Next: Value your privacy? Pay cash.

11. Your purchases stay private

piles of money in "Breaking Bad"

Drug dealers aren’t the only people who prefer the anonymity of cash. | AMC

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. In the ING survey, 69% of Americans said cash transactions were very private. Only 36% felt the same way about card transactions.

Aside from the possibility of identity theft, credit card companies and retail stores sell your purchase data, which marketers than 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.

Next: Why paying cash isn’t always the right choice

The cons of paying in cash

credit card

Sometimes there are advantages to using credit cards. | Joe Raedle/Getty Images

Cash has a lot of advantages, but there’s a reason why 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.

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