Cash or credit? For most of us, it's still both

Friday, July 14, 2017

How much cash do you carry with you?

For more and more of us, the answer is “not much.”

Credit card companies and retailers are trying to hurry the trend along, for obvious reason — profit for the cards and increased efficiency and profit for the retailers.

Visa announced it would pay up to 50 small food and restaurant vendors $10,000 to go completely cash-free. It will help with advertising and upgrade checkout terminals so they can take contactless payments like Apple Pay.

Amazon’s physical stores accept only credit cards and mobile payment methods and you may have noticed the peer-to-peer payment option on Facebook’s Messenger. ApplePay will soon allow users to send money to each other via text message and many young people use Venmo to pay each other. Walmart’s contactless payment system delivers receipts wirelessly to smartphones and credits customers with refunds if lower prices are found on certain items in nearby stores.

You’d never make it as a bank robber in Sweden, well on its way to becoming a truly cashless society, where more than half of the banks do not keep any cash on hand.

There are calls for the United States to stop printing the $100 bill, the world’s most popular currency, as a way to hamstring drug dealers and other illegal activity.

But the recent interruption in cell phone service is enough to give one pause — business comes to a screeching halt when debit cards won’t go through.

It turns out there are plenty of good reasons to keep some cash around. In fact, government guidelines list cash as one of the essentials to keep on hand in case of disaster, along with food, water and prescription medication.

Don’t hide your life savings under your mattress, but a couple of hundred bucks in stashed cash will come in handy if you need to buy gas after your wallet is stolen.

There are few places that won’t accept cash, and if your servers are honest, they’ll tell you they’d rather have a few dollars left on the table for a tip now than wait for it to run through the credit-card system.

We’ve noticed at least one local store that sets a lower limit for the use of debit cards, and it’s not unusual to receive a discount if you choose to pay in cash rather than forcing the store to pay credit card processing fees.

You might even offer cash to your doctor or jeweler to see if a cash discount would result.

There’s a good reason most stores accept credit cards, because they know you’ll spend more than enough to make up for the added fees.

The reverse is true; seeing some of your limited supply of greenbacks leaving your hand tends to make you spend less. Researchers have also found that we tend to enjoy items more if we’ve paid cash for them.

It’s impossible to run up debt if you only spend cash, and author Dave Ramsey’s “envelope system” is an effective form of budgeting. When the cash for certain categories is gone, it’s gone.

Hand someone cash for a purchase, and your credit rating is meaningless, and unless the seller posts about it on social media, the sale remains private.

That’s why drug dealers like $100 bills, as mentioned above, but even law-abiding citizens have a right to privacy.

Of course, cash can be stolen, can be lost or delayed in the mail, doesn’t carry reward points, can’t be sent over the telephone and complicates airline and hotel reservations.

For the foreseeable future, a combination of cash and credit cards will make up our personal finances.

Respond to this story

Posting a comment requires free registration: