Even with the prevalence of credit cards and their ability to make purchases so simple, I'm still a fan of using cash in many instances. According to MSN Money, "Americans who prefer paying with cash, rather than credit cards, are likely to see a larger amount of discounts coming their way in the near future thanks to new rules that allow for greater flexibility among businesses in this regard. Already, many companies have started putting the new allowances to use."
While I'll admit there are certain benefits to using credit cards such as when traveling or when buying things online, for the majority of our around-town purchases like when we're going to the grocery store or heading out for fast food, I still prefer cash.
According to that same MSN Money article, "A settlement between Visa and MasterCard and a number of major retailers and industry groups allowed participants in that agreement to begin allowing consumers to receive discounts of as much as 4% when paying with cash, rather than credit or debit, according to a report from the Washington Post. This was already very popular among gas stations, but has now branched out to a larger number of other types of stores as well."
This could be a huge benefit for our family if we started getting a 4 percent on the majority of our cash purchases. Not only would this act as an incentive to use cash for even more of our purchases, but it could end up earning us nearly $300 a year in discounts on things we typically pay cash or could pay cash for anyway.
A forced cost analysis
Paying in cash can be a great way to make us think a little more before spending. I tend to liken credit card use to using chips in a casino. Not seeing our cash get frittered away tends to be made just a little bit easier when it disembarks in the form of a piece of plastic rather than as actual cash.
When I'm forced to hand over actual dollar bills, it makes me do a sort of cost analysis on what I'm buying. Not only do I stop and think a little bit more about the amount I'm spending as I'm forced to extract dollar bills from my wallet, but I also tend to think more about how hard I've worked for that money.
Less chance for fraud and debt
According to creditcards.com, as found by the Federal Reserve's G.19 report on consumer credit, released in July of 2013, the total US consumer debt stood at 2.84 trillion as of May 2013. Meanwhile, the number of identity theft victims rose to over 12 million in 2012 and had over $21 billion stolen according to a foxbusiness.com report.
And sure, there is always the chance that I could lose my wallet or have it pick-pocketed and lose my cash. This is why I mentioned earlier that having a credit card for certain purposes like travel can be beneficial. However, when I carry cash, I don't have to worry about card readers at gas stations, a waiter making off with my number when I pay my bill at a restaurant, or similar theft or fraud. And knowing that according to creditcards.com, the "Average card debt per U.S. adult, excluding zero-balance cards and store cards (is) $4,878. (Source: TransUnion analysis of May 2013 credit files.)", it's a great incentive to use cash instead to help us avoid debt.
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The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.
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