Sometimes cash is still king.
You can earn valuable credit card points by using rewards credit cards. But as much as I love earning credit card points, I know that I won't be able to swipe my credit card every time I shop or visit a restaurant. If you usually pay for your purchases using credit cards, you may still want to keep extra cash in your wallet. Here are a few reasons why.
1. Avoid unnecessary ATM fees
While ATMs are convenient, they're not always free to use. If you need cash and withdraw money from an ATM that is not in your bank's network, you should expect to pay a fee -- unless, of course, your bank reimburses ATM fees, as some banks do. Checking account fees (like out-of-network ATM fees) can add up faster than you realize. By keeping cash in your wallet at all times, you can waste less of your hard-earned money.
2. Some businesses only accept cash payments
While many establishments accept debit credit and credit card payments, that isn't always the case. Some businesses prefer to accept only cash payments to save money on merchant fees. If you stumble upon a cash-only business, you'll be forced to find a nearby ATM or go elsewhere. But if you keep cash in your wallet, you'll be prepared.
3. Easily split the bill with friends
If you're dining out with a friend and want to split the cost of the bill, it can be easy to do that when you have cash in your wallet. Payments apps provide another way to split expenses with friends and family, but not everyone uses the same payment apps -- so that may not always be a convenient option. If you have cash, you can split the bill quickly without using apps.
4. Avoid paying credit card convenience fees
When businesses accept credit card payments, they pay credit card processing fees. Some businesses pass credit card processing fees on to the customer to reduce operating costs. If you visit a business that charges a credit card convenience fee, you'll be paying more money than necessary for your purchase. But you can avoid this fee if you have cash on hand.
5. You can leave cash tips
If you have cash in your wallet, you can leave cash tips when dining out or when you encounter a situation where you want to tip an employee. Cash is a win for tipped employees because they can immediately walk away with cash when they finish their shifts. Some tipped employees wait a while to receive credit card tip payments. And who doesn't love to be paid in cash?
Don't give up on credit card points
If you like earning credit card points, use rewards credit cards when you can. But it's not a bad idea to stash some cash in your wallet so you're prepared to use cash when necessary. It may be easier to pay for some purchases with cash, and in some cases, you may save money. Check out these personal finance resources for additional money tips.
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FAQs
Cash allows you to purchase essential items like food, water, and medical supplies when electronic means of payment are unavailable. Cash can also serve as a backup in instances of identity theft or fraud, offering an alternative means of payment while resolving any issues that may arise.
Why should you always carry cash? ›
Cash allows you to purchase essential items like food, water, and medical supplies when electronic means of payment are unavailable. Cash can also serve as a backup in instances of identity theft or fraud, offering an alternative means of payment while resolving any issues that may arise.
Why use cash instead of credit cards? ›
Cash makes it easier to budget and stick to it
It's also an eye-opener and keeps you in reality as to how much cash is going out vs. coming in from week to week or month to month. These are just a few of the reasons why it's better to pay with cash vs. a credit card.
What are some advantages of using cash? ›
Advantages of paying with cash
- you only spend what you have.
- you don't pay interest or fees.
- you may get a discount since merchants don't have to pay a fee to accept cash transactions.
- it may be faster and easier than other payment methods.
- it doesn't require equipment, internet or electricity.
Reasons people keep cash at home include emergency preparedness, financial privacy concerns and mistrust of banks. It's a good idea to keep enough cash at home to cover two months' worth of basic necessities, some experts recommend.
What are the advantages of cash-and-carry? ›
Pros of Cash-and-Carry: - Lower Prices: Cash-and-carry stores often have lower prices than traditional retail stores because they don't have to pay for delivery, storage, or other services. This can be especially beneficial for small businesses or individuals who are on a tight budget.
Why is cash holding important? ›
As such, the benefit of holding some money in cash is that you help reduce the chances of becoming a forced seller during an investment market downturn. By having this safety measure in place, you can help cover some expected or unexpected expenditure without negatively impacting your long-term investment strategy.
What is the best reason to use cash? ›
4. You Can Get a Discount for Paying With Cash. Most merchants must pay a fee (typically 1.5% to 3%) to credit card companies for every transaction. To encourage consumers to pay with cash, they may offer a discount that can cut the cost of purchases.
Why is cash so important? ›
Cash allows you to keep closer control of your spending, for example by preventing you from overspending. It's fast. Banknotes and coins settle a payment instantly. It's secure.
What are 4 uses of cash? ›
Cash has many USES, whether it is providing for an unexpected event, a short-term savings goal, your everyday expenses or even a source of investment. By ensuring you have each of these areas covered, you can better focus on your longer-term goals, including preparing for retirement and paying for education.
Cash flow positive simply means more cash coming in than going out. This metric indicates that a business has enough working capital to cover all its bills and will not need additional funding.
What are the benefits of using cash only? ›
You Don't Get Into Debt as There's No Credit
With cash only purchases, as soon as you buy something, you own it. You don't worry about repaying debts, so you're much less likely to accumulate debt in the long run.
Why do people prefer to hold cash? ›
For transactions People need money for day-to-day living, paying bills, making purchases, and ensuring they can cover their expenses. As a precaution People usually save money to ensure that they can cover emergency bills or costs, such as illness or unplanned repairs-related costs.
Why is cash a necessity? ›
Manage unexpected expenses without stress, for example, if equipment needs unexpected repairs, cash is available without the need for financing. Minimize the risk of any market fluctuations, changes in interest rates or the need to borrow.
Why do we still need cash? ›
By carrying cash, we avoid the chance that credit and debit card payments may not be available. Inclusion: Notes and coins are crucial to prevent the exclusion of vulnerable groups like the elderly or low-income households who may have less access to digital payment means.
Why do we always need cash? ›
Cash was rated the 'most safe, convenient and trustworthy' means of payment. Some 85 per cent of respondents also told the BoE that cash should be available in case technology fails or a card is not accepted. But using physical money as a back-up won't do much to halt the march of card payments.
Why we should all use cash? ›
Cash allows you to keep closer control of your spending, for example by preventing you from overspending. It's fast. Banknotes and coins settle a payment instantly. It's secure.
Why is cash handling important? ›
Cash handling ensures that you know where your cash is and who has access. On the other side, improper systems will make it much harder for you to identify mistakes and rectify errors. This means if you notice a discrepancy in your safe at the end of the day, you won't be able to track it back to the source.
Should you always have cash on you? ›
While cash can be useful to have on hand, a credit card is much more secure than carrying around a wad of dollar bills in your pocket. Plus, using a credit card responsibly (paying off your balance in full and on time every month) can help you build a better credit score.
