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8 Times When You Should Probably Still Use Cash

How to make that cherished cash we work for, work for us.

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Man holding stack of banknote in both hands doing a payment at old wooden table,high angle view.US banknote.

Cash or credit?

There are numerous advantages to using a cash-only system, Danny Kofke, teacher and author of The Wealthy Teacher: Lessons For Prospering on a School Teacher’s Salary, says. “Many of us have an emotional attachment to those crisp, green bills. We know how early we got up and how long we worked to earn them,” Kofke says. “This makes it much harder to part with them compared to just swiping a piece of plastic through a machine.” But many of us have been using cash less now than ever before due to the coronavirus pandemic and fear of spreading germs. When swiping a card or plugging in your chip at the register, no one touches your card except for you. 

Though there are some things you should always buy with a credit card, when using a card, you don’t visualize how much you’ve spent at the end of the day, says Saranya Ramanathan, personal finance blogger at onefinewallet.com. “It’s different with cash. You see dollars turning into cents right in front of your eyes, and this avoids unnecessary expenditure. Using cash is more of a mind trick to stop over-spending,” Ramanathan says. So while many of us are opting to use cards-only these days, there are a few times when you should probably still pull some cash from the ATM. Don’t miss more psychology tricks to spend less while you’re shopping

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Top view of cafe latte with "Tulip" latte art in the blue ceramic cup on the wooden table.

Small purchases

Small purchases at local retailers and businesses are ideal venues for using cash, and you may even get a small discount for doing so, says Beverly Friedmann, content manager for ReviewingThis. Some small merchants charge fees for using credit cards, too, she says. “It’s also always standard to tip for any services rendered using cash, and it’s a nice gesture to do so even at restaurants, instead of filling out the gratuity option on the bill,” Friedmann says. Check out these habits of people who are really great at saving money.

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Business man presenting his credit card. Shallow DOF, focus on chip o card. Concept: Shopping and spending.

Avoiding fees

Cash is a one-time deal: no fees or debt. But when you use credit cards, you run the risk of having late fees, catching up on bills, accrued debts, and having a negative credit score, Friedmann says. “You’ll also never overdraft with your bank by using cash instead of a debit card,” she says. Here are a few times when you should never use your credit card for payment.

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Psychological factors

You spend less money when you use cash. This is because you literally have to watch how much you are spending, Friedmann says, which makes it one of the best creative ways to save money. Credit cards allow you to avoid facing the reality of how much you are spending. Thus, you’re more likely to splurge on impulse purchases that are outside of your budget and spending limit, she notes. And, this visual of accumulating cash may make you become more resourceful about planning for the future.

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Using cash simply makes budgeting and planning easier, Friedmann says. “Budgeting becomes more accurate because you can see exactly how much you have to spend and allocate resources more appropriately on a daily and monthly basis.”

“It’s well known that people who use a credit card tend to spend more and with cash they don’t have.  If you are truly serious about your goals of saving, then cash will always be the way to go,” says Chantay Bridges, realtor. “It limits impulse buying and helps to keep you on track because you are only spending what you have to spend, which is a win-win for your overall goals.” These 7 other reasons you should use cash will make you want to stop at the nearest ATM.

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Store discounts

Some retailers, especially small businesses and mom and pop stores, are charged fees for using credit card machines. Because of this, some offer a small discount for using cash as opposed to credit or debit cards, Friedmann says. In some circumstances, having wads of cash on you can even help coerce a salesman. “I had a friend who was in the market for a television set with a retail price of 1,000 dollars. I told her to walk into the store with 700 dollars cash and see what would happen. After a few minutes of negotiating, she got this set for the 700 dollars she walked in with,” Kofke says.

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There are almost no retailers or businesses that won’t accept cash, Friedmann says. You can always use cash as a reliable source of payment or have it on hand as a backup method of payment if your card is declined, she notes. This is especially important when traveling abroad, as having cash will eliminate a step when exchanging currency.

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Credit card close-up. Plastic card on black background

Good credit

When you use cash, Bridges says you know from the beginning that your credit standing is good and will remain that way. “When you utilize cash there [are] no worries about late payments, payoffs, or repossessions. You have no worries about your credit being affected. Cash assures that no creditor will ever call you wondering where their payment is,” Bridges says. Likewise, here are some times you should never use your credit card for payment.

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Limits companies’ tracking

If you’ve noticed that after purchasing something, all of a sudden you have an increase in solicitations and offers, this is because retailers can track their customers’ spending, share their information with a third party, and target them with more advertising, Bridges says. Plus, using cash could even cut the amount of junk mail you receive, Bridges says. “There is a good chance they may not be aware it’s you who is paying, reducing the number of offers and so forth that come in the mail. Paying with cash helps to reduce this,” she notes. Here are more ways you can stop getting so much junk mail.

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And a card?

So we now know when to pull out the bills, but when should we pull out the plastic? “Larger expenses, like travel, hotel fees, and monthly bills, are typically best to put on cards. By doing so you can collect rewards points like free airline and hotel stays and different cash back rebates,” Friedmann says. But is it worth it to use cashback credit cards? Friedmann thinks so: “Over time, these cashback rewards and incentives really add up.” Cash is great in many circumstances, but there are still some times you should never pay with cash.


Isabelle Tavares
Isabelle Tavares is a journalism graduate student at the Newhouse School of Syracuse University and former ASME intern for RD.com, where she wrote for the knowledge, travel, culture and health sections. Her work has been published in MSN, The Family Handyman, INSIDER, among others. Follow her on Twitter @isabelletava.