I like using cash over credit card
April 5, 2017 4:30 AM   Subscribe

In some countries, cash is used much, much more frequently than credit (or even debit) cards are. After having lived in a place where that is the case, I realize that I enjoy using cash instead of credit card. Am I a fool to use cash over credit card in my daily life?

I like that I can budget in the back of my mind when I break a tangible $50 note instead of pulling up a list of transactions on a banking app. It makes me a little more thoughtful about the things I purchase, and in turn that also makes me enjoy each purchase more, and ... actually, make healthier decisions overall. My quality of life is better when I use cash. Apparently, there are even studies that back up my suspicions about my spending habits when using cash versus credit.

I certainly like the benefits of credit card membership (airline miles, for one). Credit cards are also more secure than cash in the sense that if cash is stolen or lost, it's gone. I am young and still building my credit history. I don't plan to eschew credit cards entirely (e.g., for flights and other large purchases, monthly bills), but for things such as everyday purchases and food, is it okay to use only cash whenever possible?

I realize that when I was living abroad I tended to make in-store purchases more frequently. In the US, I live in a place where online shopping has become my modus operandi. I've found that I like in-store shopping and I'm usually happier with my purchases overall, even if oftentimes the variety and options are greater online. Is the cost difference of buying items in-store and not being able to easily compare prices and online significant and likely to add up over time? I can think of some examples -- books, for instance-- where online prices are oftentimes much cheaper than in-store prices and am not sure if that is the case pretty much everywhere in the US.
posted by gemutlichkeit to Work & Money (35 answers total) 6 users marked this as a favorite
You're not a fool, there are those who think you are actually clever like a fox. If you don't use your credit card, you don't rack up debt, and that puts you ahead of like 90% of the population.

I say, you do you and stick to using cash unless it is an emergency or you have no cash option.
posted by EmpressCallipygos at 4:44 AM on April 5, 2017 [13 favorites]

I like cash for a lot of the things you mentioned, as well as privacy. No one can see what you're spending on, least of all credit-card companies. Not that I'm a Luddite, but it's just rather nice, you know, to be able to spend money and not have it tracked.

However, I do use credit cards for just about everything else other than street food. Note that I also pay off my credit cards in full every month. This is due to:

1) credit card points (so many free hotels and airline perks over the years)
2) purchase protection (once, I had placed a large deposit for a service, and the company went bankrupt. Got back my $1000. another time, I bought a handbag for $100 which broke in 9 months, and I was able to show my credit card bill to prove that I had bought it. they fixed it for free)
3) general convenience (no need to find ATMS! credit card fits in a small tiny card holder)
4) splitting bills in groups (not sure about the US, but in the UK, you don't have to faff around with trying to get change on a $36 on a $50 note for 8 people, you can just state exactly what amount you want to pay. This is probably my biggest gripe about other people paying in cash.

Theoretically I like cash. But practically, credit card is extremely convenient. Obviously the caveat being I'm a saver and I don't use credit cards like a spending crutch anyway.
posted by moiraine at 4:46 AM on April 5, 2017 [10 favorites]

We used to pay for virtually everything with cash. There are upsides and downsides to that.

1) Almost everyone takes cash. This is a huge plus for cash.

2) You have to replenish cash, which may be tricky on weekends, at night, etc., unless you're carrying an ATM card (we don't). A credit card is basically the same as carrying a very large amount of cash that is always available in the exact correct denomination.

3) You can be robbed of cash with no recourse. Your credit card offers extremely strong protections against fraud.

4) Buying with a credit card can give you things like post-sale price match (Citi Price Rewind, etc), extended warranties on your purchase through the credit card company, and other benefits.

5) Some things, like renting a car, are very difficult with cash. Your credit card may also offer additional rental protections so that you don't need to buy the rental company's damage insurance.

6) Credit cards can help build your credit rating.

7) If you keep detailed track of your finances, people often look at you strangely if you ask for a receipt when you pay cash. Restaurants in particular like to disappear their bill when they bring your change back. They always give you a receipt with credit cards.

8) Credit cards are susceptible to fraud, including skimmers, break-ins (Target/Home Depot/etc), and other badness. You are not likely to be liable in the end, but there can be some annoyance in the meantime dealing with a breach, and you might find yourself without access to your card if they decide to reissue one and cancel your old one before you've received the new one. This means you need to carry two diverse cards, minimum.

9) If you lack the discipline (or incoome) to pay your bill in full every month, you can end up paying a lot for the privilege of credit use. Cash is a clear winner there in some cases, because it forces you not to make a purchase that you cannot actually pay for.

10) It's basically a matter of not leaving money on the table. With some credit cards such as Amex Blue offering 6% back on purchases at grocery stores, and 3% back on fuel, and other various deals, we've received a free Mediterranean cruise, a new refrigerator, much of a new washer/dryer pair, many of my larger workshop tools like table and miter saws, high end smart TV's, etc., paid for with credit card rewards programs. We've received five figures in rewards over the last decade.

So we carry cash, but pay for almost everything on a variety of credit cards, which we track aggressively in Quicken using its mobile app, which makes tracking usage, amount owed, etc., very easy.

I don't think there's anything unhealthy about any particular mix of using cash vs credit, as long as you're making a fully informed choice. You have to do what works for you, and there is no reason to fret over it if you're comfortable with what you're doing.
posted by jgreco at 5:08 AM on April 5, 2017 [7 favorites]

I'm a huge fan of cash. I even have a checkbook which I use to pay for some things. I have credit cards and pay them off at the end of every month. As long as you feel like you know where your money's going and you are not unduly inconvenienced, cash is just fine.The only way I would say it's NOT fine is if you're trying to pay someone who doesn't want to be paid that way. If you make your preference for cash into someone else's inconvenience, then it's a problem. Otherwise, no it's fine.
posted by jessamyn at 5:21 AM on April 5, 2017 [3 favorites]

With people mentioning credit card points and "leaving money on the table", note that this represents an institutionalized mechanism of wealth transfer from the poor to the rich, as studied in this 2010 paper from the Boston Fed.

Where you stand on that personally is up to you.
posted by 7segment at 5:38 AM on April 5, 2017 [17 favorites]

I'm curious as to how my Amex usage might be a Bad Thing, as seems to be implied by 7segment

Credit card companies charge merchants a portion of each transaction. Rewards programs basically turn around and give some of that to you. Poor people and people with bad credit end up paying for some of that because the merchants raise the prices to account for losing ~3% of transactions to Amex (even though they're paying cash - credit card companies fought for years to try to prevent things like cash discounts and even though it's allowed now, it's rarely done in retail other than gas stations) or because they're shunted into high cost/fee credit cards that don't offer rewards.
posted by Candleman at 6:52 AM on April 5, 2017 [2 favorites]

Research shows that people tend to spend less when they use cash.

They give you points because they know that most people don't pay off the card monthly, and they will more than make it back in interest.
posted by theora55 at 6:56 AM on April 5, 2017 [1 favorite]

I don't think you're a fool — and I say that as a dedicated CC user who uses cash as little as possible. There are trade-offs, both pros and cons to using credit cards, but it's not so overwhelmingly in favor of credit cards that I'd say "OMG you must use a credit card whenever possible." You seem to have a good grasp of the advantages and disadvantages of credit cards, and you've made an informed decision about which one is right for you. I get several hundred dollars a year by using a cash-back card as my primary card, but if you lack the discipline or ability to pay the card in full every month, that would quickly be wiped out by interest and fees. And even if you would pay it off every month, it's a valid choice to decide that the advantages of cash (or, on preview, the moral costs of CCs) outweigh the "money left on the table" for you.

One aspect of brick-and-mortar vs. online shopping is that if you're very picky about a product, it can cost some time checking multiple stores to see who has the brand/flavor/color/scent/size/etc. you like in stock, while it's a matter of minutes to find it online (or else discover, to your dismay, that the company has ceased production of your favorite version). But if you like brick-and-mortar shopping, maybe you like that hunt across multiple stores, and if you do that's totally fine too.
posted by DevilsAdvocate at 7:01 AM on April 5, 2017

With people mentioning credit card points and "leaving money on the table", note that this represents an institutionalized mechanism of wealth transfer from the poor to the rich, as studied in this 2010 paper from the Boston Fed.

Where you stand on that personally is up to you.
While it is undoubtedly true that the system extracts cash from the poor and returns money to the rich, that really misdirects the blame. The money is going to the bankers and credit card processors, even people getting rewards are generally only getting a rebate of about half the actual fees collected. I'm not sure what the alternative is -- opting out just adds your money to the pile of cash the system already generates.
posted by Lame_username at 7:05 AM on April 5, 2017 [2 favorites]

Cash is a bit less traceable. That's becoming less true over time.

Credit cards are bloody wonderful if you're OK with everyone knowing what you buy and you pay off the whole amount every month without fail.

Paying with a credit card: "That's $11.50 please" , done.

{you do have paywave?}

Paying with cash: "That'll be $11.50 please". "ah. um. I have a 20 and a quarter and one dime. damn, just the 20 no here's a five no go with the 20 er... "Here's your change, lovingly handled, sneezed on and recirculated by hundreds. In your hand. With which you are about to eat the burrito."

But! If you have a credit card, you will stop worrying about the exact amount, hand the card over and spend more than you intended.

And, if you ever, even once, let a payment pass, they will shaft you hard.

Cash will largely go away over the next ten years. Either we all continue to make Visa very, very rich or we invent a way to make a secure currency so convenient we can paywave it.

posted by Combat Wombat at 7:11 AM on April 5, 2017 [2 favorites]

Credit cards really only make sense as a consumer if you commit to paying off every month. If that's not possible, what worked for me for years was cash and a floating line of credit I could use to move money back and forth to the cash account. This was my strategy for a good 15 years until I was married, and we combined our finances.

I had three bank products. The first was a regular savings account. My pay got deposited into this. I would transfer bi-weekly an amount by hand to a second "cash" account. This "cash" account was a no-fee/high transaction account I used for transactions by either cash withdrawal and/or with a debit card. It was also the account that had all the monthly bills paid out of it. Finally, an unsecured line-of-credit which I could use for planned larger purchases.

The friction of having to transfer from savings to "cash" was enough for me to be able to budget reliably. If I didn't have it in "cash" I couldn't spend it. For a long time I had it set up so that I couldn't even access the savings account from my debt card (at point of sale or atms). This was inconvenient occasionally, but did save me from poor impulse control a couple of times.

I did have a couple of credit cards through this time, but used them selectively and always made sure to pay them off every month, even if that meant paying them out of the line of credit. As CC rates were around 20% at the time and the loc was 5% that was pretty much a no-brainer as far as I was concerned.

We do things differently now that we're married; our financial situations are more flexible and more complex. But basically we use credit cards exclusively now mostly to get travel points. And we pay it off every month. And, being older, and little more gunshy, we're a little more disciplined than either of us were as singles. The way you (I) think about spending changes when debt is shared and you're responsible to someone else as well just yourself.
posted by bonehead at 7:13 AM on April 5, 2017

Either we all continue to make Visa very, very rich or we invent a way to make a secure currency so convenient we can paywave it.

In Canada at least, we've had tap to pay with debit cards for a number of years. They're equally convenient as CCs.
posted by bonehead at 7:17 AM on April 5, 2017 [6 favorites]

I use credit cards 99% of the time, my husband uses cash 99% of the time.

Trying to keep track of his spending in Quicken is SO FRUSTRATING. He'll hand me a stack of receipts, stapled together - "I took out $200 in cash and then spent $23.21 on groceries and then $20 at bowling and $4.24 at Home Depot and $6.23 for dinner" and I have to split every transaction into multiple transactions and then the amounts never add up perfectly so there'll be, like, $1.72 of money that is left over from the $200 after all the transactions - how do I assign that to a budget matter? Do I carry it over to the next large withdrawal he makes? GAAAAAAAH"

Meanwhile now that I have Apple Pay on my phone it's the easiest thing in the world ever.
posted by Lucinda at 7:19 AM on April 5, 2017

I think your method of cash for everyday purchases and food and credit cards for larger expenses is really sensible. You get the benefit of the more tangible cash budgeting for those daily things and the protections that credit cards offer and builds your credit. Using cash for smaller, daily purchases is also beneficial to those businesses.

As for online shopping vs in-store shopping, that's a trade off you'll have to weigh for yourself. I'd rather pay the higher cost for books at my local indie bookstore & comic store because I like living in a place that has those. I love cooking and own a lot of kitchen implements; these I buy at a local worker-owned stored, so I get the fun of physically shopping there and knowing I'm supporting a really good place and my local economy. I've had good luck with getting items special ordered through local stores if they already carry that brand or things from the same distributor. On the other hand, I've had very little luck finding shoes that fit and I have a hard time shopping for clothes in person, so I often order those online.
posted by carrioncomfort at 7:48 AM on April 5, 2017

I have a serious medical condition. For some years, I avoided cash as much as possible for health reasons because it can be shockingly, disgustingly filthy stuff. When I was incredibly sick, this was a real problem for me. It is not such a big problem these days. Furthermore, both silver and copper have antimicrobial properties. So, coins that contain those metals tend to be pretty resilient in the face of germy situations. Paper money can be much more problematic.

The points systems and reward systems are there to actively encourage you to use the cards. The bankers are not fools. This is making them money. So, you should be skeptical of the value these reward programs really add. Take a long, hard look at them with a jaundiced eye.

If you can get a no interest deal for a time, then you genuinely get money back -- until the no interest time period runs out and you find yourself owing a lot more than intended because it was all too easy and you ran the card up insanely, and now you don't have the money to pay it off. If you are paying interest on a balance carried, the rewards are much less valuable than you think. It can be a little like the obsessive person who drives across town to get bread at a store for 2 cents less. They paid more on the gasoline to get there than they saved on the bread.

Someone has to pay those transaction fees. Some merchants will give discounts for cash because it genuinely cuts into their profit margin to pay the fees. So everyone using credit cards does add additional costs to the system.

A stable money supply is a relatively recent human development. It only goes back in a big way by a few hundred years. The primary value that money adds to the system is efficiency in trade. It cuts out a lot of barter, and this saves enormous time. When money systems collapse, barter comes back promptly, as was recently seen in Greece.

Taking it for granted that there will always be a question of cash versus credit card is a little foolish. There are myriad things that need to go right at scale to have either one at all. Those things can rapidly come unravelled.

I think you should do whichever works for you and when this question nags at you, brush it off as "Well, it is nice to have silly first world problems."

I will add that I think a side benefit of using cash is that your math skills don't necrotize. I am 51. When I was growing up, everyone knew how to make change because cash was the norm. Now, cash registers do the math for you, cash is not the norm and cashiers often have no fucking clue how to add, subtract, count change, etc. This is a thing I find maddening in a "How stupid are you?!!" kind of way. I am typically pretty patient with people and understanding of situational factors behind personal shortcomings, but this one thing hits my "the world is going to hell in a hand basket" nerve. Come on. Your job as a cashier is processing payments. Why do I have to repeat myself five times here?
posted by Michele in California at 8:07 AM on April 5, 2017 [1 favorite]

I use credit cards way more than cash, and as others have said, there are a number of upsides to them. But if cash helps you control your spending and allows you to enjoy yourself more, then by all means keep at it. People can fall into a trap of thinking that financial decisions must be "logical" and disconnected from our feelings, but there is a huge emotional component to spending and money. So, for example, if you have a low interest rate on a mortgage, it may not make financial sense to pay it off early if you can make more money investing the cash. But if you're the type that would experience a huge mental weight lifting from your shoulders if your mortgage gets paid, then by all means pay it. Same goes for using cash - if it helps you control spending and you enjoy using cash more, the fine-grained financial disadvantages don't outweigh the mental advantages.
posted by craven_morhead at 8:09 AM on April 5, 2017 [4 favorites]

I have a weekly budget of things I use cash for: groceries & sundries, and incidentals like coffee, lunch and snacks. If I run out then I run out. I really like this system. NYC seems to still be a largely cash economy though - people from other parts of the US tell me they never use cash.

Paying with a credit card: "That's $11.50 please", done.

This has not been my experience. Standing on line behind the credit card paying person, it feels like a several minute process for the cashier to swipe the card, wait for approval, and either find a pen for the customer to sign or turn the machine over to the customer to finalize.

I was complimented the other day on my use of exact change! In fact the cashier said "I am seriously in awe of your exact change game." Maybe cash is in for a nostalgia comeback with the snake people?
posted by maggiemaggie at 8:26 AM on April 5, 2017 [5 favorites]

Standing on line behind the credit card paying person, it feels like a several minute process for the cashier to swipe the card, wait for approval, and either find a pen for the customer to sign or turn the machine over to the customer to finalize.

This is an American problem, because American banking has just arrived in 1991, apparently. In other countries, swiping and signing is ancient history; shoppers just wave a card over a machine and the transaction is complete near-instantly. Swiping and signing isn't really a thing in Canada and the UK, at least.

I can't say I understand preferring cash for daily interactions, but the reality is that paying with cash is likely to keep getting less and less common, and eventually less and less welcome. I don't think it's at all inconceivable that more and more vendors will opt out of cash entirely, like Uber or Airbnb.
posted by Hildegarde at 8:53 AM on April 5, 2017 [8 favorites]

I like using cash, in part because I dislike the idea of being forced to sign up for sleazy* financial services in order to buy basic items like food. So, continuing to use cash is a way that I try to keep using cash normalized - even though I of course know that my piddly individual choices have no real effect on the big picture.

I do have a card in case cash doesn't work for some reason (I am out of cash, buying online, etc). It's no real use being puritan about it. But if I have the choice between cash or card I prefer cash. And I've not really noticed this causing much inconvenience... like, it doesn't take that long to hand someone cash and get your change. A few seconds, maybe. It's not like writing a check.

So keep using cash.

* I know that good deals exist, but not for everyone, and the business wouldn't exist at all if they didn't make a profit.
posted by Kutsuwamushi at 9:04 AM on April 5, 2017 [2 favorites]

Credit card companies charge merchants a portion of each transaction.

That's true, but it's also true for cash, just in a different way. Banks charge merchants fees for handling cash handling too, sometimes both for cash deposit and for supply of bills and coins. The fees are typically smaller (0.2% to 0.3% for cash in my part of the world, as opposed to as much as 10 times that for the card companies), but cash still isn't completely free for businesses either.
posted by bonehead at 9:05 AM on April 5, 2017

Also, I understand that obviously the Green has a US bias, and therefore high credit fees for merchants are a concern for a lot of people here.

Newsflash: In all of the EU, as of December 2015, all credit and debit card fees that the bank can charge per transaction for merchants and businesses are capped at 0.2% (debit) to 0.3% (credit). That's about the same as a cash transaction.

The EU caps credit and debit card fees by banks to businesses.

So the moral argument against credit card, on cash subsidizing credit/ debit cards does not particularly hold water in Europe.

The same thing goes with credit card signatures (an outdated concept if I ever saw one!). In the UK and EU, contactless cards/ machines are everywhere, and for the puritans, there is chip and pin, which takes a fraction of time than fishing for coins and notes.
posted by moiraine at 9:20 AM on April 5, 2017 [2 favorites]

Here in Vermont, many prefer to use checks or cash over credit card. Much of that comes from their ethic of living within their means, but also because we all know a small business that realizes how much money they lose in credit card processing fees. Also, not all businesses here even bother taking credit cards. Either because the bigger service providers are too expensive or they don't have real Internet in order to use things like Square, and other services.

tl;dr is I applaud you.
posted by terrapin at 9:30 AM on April 5, 2017 [1 favorite]

Cash is okay if you have a no-fee bank machine nearby. If I use one out of network, I'm typically charged 3% of the withdrawal.
posted by scruss at 9:44 AM on April 5, 2017

As a counterpoint, I have a bank that refunds my ATM fees which can be helpful for this sort of thing.
posted by jessamyn at 9:50 AM on April 5, 2017 [1 favorite]

Here in Vermont, many prefer to use checks

Electronic money transfers, facilitated through email, are killing cheques in Canada. We've just been through a rather expensive period of house repairs and everyone either wanted an e-Transfer or grey-market cash payments. Absolutely no one wanted a cheque---we did ask and got rejections every time.
posted by bonehead at 10:05 AM on April 5, 2017

e-Transfer fees are $1.50 for us, btw. But paid by the sender, so it's "free" to the merchant, which is kind of an interesting reversal by the banks.
posted by bonehead at 10:09 AM on April 5, 2017

Cash is king. Credit cards are a trap. Be careful around traps!
posted by agregoli at 10:29 AM on April 5, 2017

Standing on line behind the credit card paying person, it feels like a several minute process for the cashier to swipe the card, wait for approval, and either find a pen for the customer to sign or turn the machine over to the customer to finalize.

This is the opposite of my experience in the US - it's the cash transactions where there's fumbling and waiting (or worse, the people that bring a check book to the grocery store). Card transactions -the customer swipes/inserts the card themselves and in seconds are done. In many cases with things like groceries, the stores don't even require a signature for transactions under $50 or so.
posted by Candleman at 11:30 AM on April 5, 2017 [4 favorites]

Contactless payments are significantly faster and more convenient than cash. That's certainly one consideration for me for cash vs cards. As noted above, my "cash" account was pretty much literally that, an account from which I withdrew cash for shopping and everything else. Contactless payment has completely removed the major reason I preferred cash to other methods of payment, speed and ease of transaction.

They are certainly one of the best small quality of life improvements in the past two decades when standing in the wind and snow at a self-service pump.
posted by bonehead at 12:02 PM on April 5, 2017 [1 favorite]

I find that the accountability loss of credit cards - swiping something so it feels like "free money" - is effectively addressed by a budgeting program, especially one where you need to enter or review transactions manually (YNAB is a perennial favorite everywhere, but also programs like Quicken). For me, a $20 bill can practically melt into thin air but a log of transactions subtracted from my budgeted balances holds me accountable to exactly where I spend every penny.
posted by R a c h e l at 12:21 PM on April 5, 2017 [2 favorites]

Oh yeah, and if you're curious about what else you're leaving on the table, definitely review all your credit card benefits - things like an automatic 90-day warranty on everything you buy, price rewind, rental car protection, travel insurance, etc. can really add value if you're aware of when you can take advantage of them. These vary a lot by card and card company, too.

That's not to say cash is bad. But these are the principal things that influence my personal decision.

Another options - for those who don't want to risk debt, I'm intrigued by zero, which is a credit card product (with credit-card level rewards and protection) but has an accounting system that acts more like a debit card, subtracting purchases from an account balance. No personal experience though - I don't believe the product has been released yet.
posted by R a c h e l at 12:29 PM on April 5, 2017

I'm with you, I prefer to use cash. I spend a little less frivolously with cash, because it feels like real money to me. I use credit or debit cards for bills or large purchases, cash for everyday items. I've operated this way for 20 years now, and it hasn't caused me any major problems.
posted by Cranialtorque at 2:27 PM on April 5, 2017

Fool? No, you're one of the smart ones.

Someone mentioned not carrying around their ATM Card, note that many banks for a while now have been issuing debit cards for ATM access but if like me you dislike carrying around debit cards, you can usually get an actual just-an-ATM card if you ask for it.
posted by Rash at 3:20 PM on April 5, 2017

If you value privacy , you use cash. If like most in the current culture, you don't care about privacy, use credit cards.
posted by Obscure Reference at 7:51 AM on April 6, 2017

The bankers are not fools. This is making them money. So, you should be skeptical of the value these reward programs really add. Take a long, hard look at them with a jaundiced eye.

I'm at least in the mid-four figures on cash back in the past few years. Having at one time been quite broke and at the mercy of the credit card companies, I take personal pleasure in extracting this money from them now. But I now have (a) a steady job and (b) enough cash reserves that if something unexpected comes up and pushes me over budget, I can painlessly cover the card payment that month and not accrue interest. OP, it's really all about your personal psychology. The cash back and other benefits are nice, but they're on the margin. If, having a card, you're inclined to run up the balance, they will wash out immediately. Unfortunately, it's really hard to determine what your inclinations are without subjecting them to real-world tests.
posted by praemunire at 8:25 AM on April 6, 2017

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