credit: freedigitalphotos.net by Stuart Miles
I have $89 and a coupon for toilet paper. I’m in the minority (with regard to the amount of cash in my wallet, not the coupon…I don’t know whether most people carry coupons for toilet paper!). Fewer and fewer people actually carry cash with them according to a report on Bankrate.com. The report seems to relate the amount of cash one has in their wallet with their overall financial security. I’m not sure there is always that big of a correlation. I carried a decent amount of cash in my wallet even when I had a lot less money. Yes, even in college. I had very little in my bank account, but I still carried cash in my wallet.
So what are the reasons for and against carrying cash?
Let’s start with against:
Credit Card points and bonuses
Oh, I do love earning points from swiping my credit card. You don’t get points or rewards by using cash. Now, I don’t use my credit card just to earn points, but I love earning cash back on purchases that I would normally make. I earn 5% cash back at the gas station, supermarket and at Amazon. Places I normally go to make purchases. Plus, for those who are churning cards, you have to meet those spending requirements to get your bonus.
Purchase Protection
When you make a purchase with a credit card, you can always dispute the charge.
Cash is Dirty
Check out this infographic John from Frugal Rules posted. So 90% of the bills in the U.S. have traces of E.Coli or staph infection! Yea, I think I’ll have to use hand sanitizer after I touch my money from now on.
Getting Change
I don’t know about you guys, but I really don’t like carrying coins. I rarely get to spend coins, unless they are quarters which I use for the laundry. Sure, I guess I can either roll them up and bring them to the bank, or bring it to a Coinstar machine. But the jar of coins in my apartment has been sitting there for years.
Easier to Track Spending
If you sign up for Mint or Personal Capital, you can link your credit cards to the site to track your spending. By using cash, you’re stuck with inputting your spending manually.
Security
A robber can’t steal your cash if you don’t have any right? You can always cancel your credit card, and most times, the credit card company will not charge you for unauthorized purchases made to your card. Although, not having any cash might make a robber mad. Ever hear of mugger money? Maybe this should be in the “reasons for carry cash” category.
Now for the reasons why you should carry cash in your wallet:
Cash Only
Some stores don’t take credit cards! I was getting my watch repaired by a street vendor in Chinatown. A girl who was also getting her watch repaired asked the vendor if he took credit cards. No, that street vendor did not take credit cards. Most street vendors and many small mom and pop stores don’t take credit cards, and if they do, they often have a minimum spending requirement.
Splitting a Check
I went to dinner with a group of friends a few weeks ago. When it was time to pay the bill, one of my friends asked me to “spot him some cash” because he didn’t carry money with him. Those Chase commercials make it seem easy…they just “QuickPay” each other the money, but I’m not sure those apps are as prevalent yet. Maybe I should look into that so no one has to borrow money from me in the future when splitting the check.
Avoid Temptation
Some people would be too tempted to just charge things with their credit cards if they only used that, so it’s better they use a cash only system. Once the cash is gone, they can’t spend it. Plus, seeing the amount of cash you have in your wallet probably makes you mentally think twice when spending it.
Credit Card Fraud
Recently, Target’s credit card as well as debit card data was breached causing many of their customers’ information to be compromised. Many other stores have had their systems hacked, as the many companies have been slow to implement more secured systems. By using cash, you won’t run the risk of having your personal information compromised.
Merchant Fees
Well, this doesn’t really affect the purchaser, but some people hate the fact that the credit card companies charge the merchant a fee every time a customer swipes their card. They argue that all the credit card users are raising the cost of goods sold because, inevitably, the cost of those fees are reflected in the things we buy. As for me, even if a small mom and pop store takes credit cards, I probably won’t swipe my card for a pack of gum. I feel bad making them pay a merchant fee. I’m not as altruistic when it’s one of those big box stores though.
Cash Discount
Many stores will give you a discount when paying with cash. You are more likely to receive a cash discount at a smaller store, not those big box stores. You often see the difference in cash versus credit prices at the gas station. I use credit though because I’m getting 5% cash back.
Blackout/Disaster
About 10 years ago, there was a blackout in NYC and some surrounding areas. In the case of a blackout or a natural disaster, it’s very likely that electricity is out and you won’t be able to use your credit or debit card. You probably won’t have access to the ATM to get cash either. So, sometimes it’s a good idea to have some cash with you.
So how much is in your wallet? If you don’t have much cash on you, why is that?
$9. I had to buy toilet paper and get cash back at the drug store yesterday so I could do laundry at the laundromat…one of the few reasons I get cash out. That and the farmer’s market, or when I’m going out to eat with friends or I owe someone for the movie ticket they purchased. Other than that, I like cc or debit so I can track purchases for tax purposes.
Tonya@Budget and the Beach recently posted…What is Your Financial Vice?
You need a coupon for toilet paper?! I like credit cards too, but still like to carry cash with me.
Wow Andrew, so many factors I hadn’t thought about! I very rarely carry any money at all, and as strange as it sounds, one of the big reasons is how dirty it is! I just hate touching it, especially the coins! I’ve also been very excited since they introduced the ‘pay wave’ technology, where you don’t even have to touch a keypad any more! (I think my wife has turned me into something of a germaphobe!). I also don’t like the hassle of dealing with change. I’m a big fan of simplicity, and I think keeping everything on cards to the extent possible just keeps everything neat and tidy.
Jason @ Islands of Investing recently posted…What’s a ‘P/E ratio’? (Part 3) – Potential pitfalls and a real life example
I figured cash was dirty, but I never really thought about it that much. I know some germaphobes! Please don’t turn into one.
I rarely carry cash. The only time I have it is after I get paid for babysitting or some other cash gig. I currently have $8 in my wallet.
Stefanie @ thebrokeandbeautifullife recently posted…Buy or Rent: The Dress!
In the Chase commercials, they Quickpay the babysitter too!
Right now I have $37 in my wallet, which sometimes is higher but many times I wait as long as possible before going to the ATM. I will usually just withdraw around $80 and that will last me over a month sometimes as I try to use my credit whenever possible to get rewards, but sometimes you do need cash so I like to have something in my wallet. I used to use cash to pay for gas because it was cheaper (and I only got 1% cash back), but now I have a card that gives 5% on gas, which almost always comes out ahead of the cash discount.
I do hate to carry coins though, they always end up in my car’s cup holder!
Debt Hater recently posted…Rocky Neck State Park Review
Yea, I don’t like to go to the ATM so I usually withdraw $100 and it lasts me awhile since I don’t use it. I’m with you on the 5% cash back on gas.
I have the equivalent of $16 right now in my wallet, but also my back-up: the debit card. I never owned and have no plans on getting a credit card. It’s very common here in Romania to carry cash, I guess that 80% of the purchases are made with cash only and most of the stores still can’t accept debit or credit card as a payment.
Fun fact: the $89 you have in your wallet is almost 15% of the median wage here in Romania 🙂
C. the Romanian recently posted…Is Blogging Really a Career or a Just a Hobby?
Wow…very interesting fun fact. Thanks for sharing. It definitely makes sense to carry cash if most stores don’t accept debit or credit cards.
I typically have no more than $60 in my wallet at any given time for most of the reasons you said. Also, I have twice had my wallet stolen and the cash was never to be seen again. I do suggest “cash diets” though to my clients who have a difficult time being mindful of their spending. Cash really is the best way to keep you on track with your budget if you have a tough time with minding your money.
Shannon @ Financially Blonde recently posted…This is Why I Blog
Twice! That’s horrible. I’m pretty good with minding my money…the cash in my wallet often stays there for a long time. I don’t have much I want to spend it on, except for the necessities.
I rarely carry cash for a few reasons 1) Like you said, it’s dirty and 2) I pursue credit card rewards. Whenever I do have cash, I usually forget all about it!
Holly@ClubThrifty recently posted…Bad Landlords to Avoid
I like credit card rewards too, but still like carrying cash. Just in case!
I usually have 25 dollars in cash at a given time in my wallet. Today I am down to 12 bucks. I prefer to have things automated, and not deal with always going to the ATM. I like getting cash back also, but it’s really tempting to over spend on items when you really don’t need them. That’s why I use my debt card more often then not.
EL @ Moneywatch101 recently posted…The 10 Secrets to Build Wealth
I don’t like having to go to the ATM either. That’s why I carry a good amount of cash…so I probably won’t have to go for a long time.
I think I have around $20 or so in my wallet right now. That’s actually a little high for me as I usually have under $10. But, we went on a day trip two weekends ago and took some cash just in case we needed it. I usually don’t carry much as we want the rewards and I find that it’s easier to watch our spending with the cards as opposed to cash just going to whatever. Thanks for mentioning my post over at Frugal Rules!
John @ Wise Dollar recently posted…Three Simple Ways to Save Money
Wow, it seems I’m really in the minority. I would feel weird with less than $10 on me.
I’m a diehard credit card user (paying the bill in full each month, of course). I carry $75-100 with me at most times even though I rarely spend cash. In the last year, I can only think of one time having the cash was extremely important.
I forgot my PIN number on my debit card at Aldi (where they only take debit or cash, no credit cards). I had a cart full of groceries including refrigerated and frozen foods. The total was something like $70. Luckily I tend to carry that much cash. I forked over a fist of those e. coli tainted bills and received a trunk full of groceries in return. Plus a few of those annoying coins.
And occasionally I’ll need cash for things like splitting a lunch bill with a friend. Or if we visit the farmers market or flea market, cash is the only thing accepted at most vendors. Small shops in my neighborhood like the Asian grocery or Latino grocery don’t take credit cards for purchases under $5-10 (and I would feel bad charging such small amounts anyway).
I figure the opportunity cost of having $100 in your wallet at all times is pretty minimal. If my wallet were stolen (something that has never happened here in America), I wouldn’t regret losing that small amount of cash.
Justin @ Root of Good recently posted…April 2014 Financial Update
We are on the same wavelength here Justin! I’m a diehard credit card user too and pay off the full amount each month, but I still like to have cash around even if I don’t use it. I can see forgetting your debit card PIN number…I don’t use it that often. And I’m with you on feeling bad for charging small amounts (well at small stores). Not much opportunity costs in my mind…what’s the interest rate…1% if that.
I currently have no cash in my wallet, but that is because of the whole bank situation I’m still in. Whoops. Normally, I’ll have around $50 on me, mostly for gas. I don’t like to get charged more for using credit. I’ll also use cash for smaller transactions, or like you said, when we run into a place that only accepts cash or has a minimum. Oh, and change really does weigh down everything. When I empty my wallet out, my bag feels five times lighter!
E.M. recently posted…Apartment Tour!
Oh boy, I hope you get that whole bank situation resolved soon. Not having cash on you is usually not an issue. I rarely use it…I just like to know that it’s there. I immediately put all my loose change in the loose change jar which is now overflowing (it’s a small jar though). I wonder how much is there.
You bring up a lot of interesting points here. I always like to have cash in my wallet for situations like splitting bills. I will almost always use my credit card, though, for cash back rewards as well as to make my life easier when I input all our spending and income at the end of the month.
DC @ Young Adult Money recently posted…5 Tips for Selling on eBay
I just added some new points that I overlooked! I feel the same way…I like getting rewards but I always have cash…Just in case!
I do carry a little bit of emergency cash with me but I generally use my credit card for everything. And I saw John’s info graphic too and now I feel like I need to sanitize my hands after I handle cash too. LOL!
Shannon @ The Heavy Purse recently posted…How To Help Your Child Finance College: A Step-By-Step Guide
Yep, I used my credit card for almost everything. But I also like to have a good amount of emergency cash. I think the infographic is going to cause me to be paranoid everytime I touch money!
Is it bad that I only carry cash so I can use it at bars..and gas at the cheap station near my house. In all honesty I’ve really transitioned away from cash and use cards for the most part. While at school we had to use cash on campus which lead to a lot more impulse spending to be honest.
Lauren @ Cheapstudents.ca recently posted…Post Grad Transition
I use a 5% cash back card so I still don’t use cash at gas stations. I also use credit for the most part…I rarely hear that using cash leads to more impulse spending.
I prefer to keep $0 in cash with me, this way I’m less likely to spend. The only time I will carry cash is when I know I have a specific item/list to buy for example groceries. I am not a believer in credit cards, so rewards would not factor in, the debit card is more convienience than anything.
Even Steven recently posted…Saving Money on Beer-The Brewery Tour and Craft Beer Week
Really! I try to replenish my cash when I’m running low even though I don’t usually use it. Why don’t you like credit cards?
My wallet contains less money only and my ATM cards. I only bring when I go outside less than $5 to spend less. If I needed to buy something, I shall withdraw enough money.
See I’d find that annoying to have to withdraw money every time I needed it. Although I have a good amount of self control so having more cash doesn’t make me spend more.
I agree! There are some great reasons not to carry cash, but overall sometimes it’s necessary. I usually keep less than $100 in my wallet at all times. That way I have cash for anything that comes up, but if someone succeeds at mugging me, it’s not even $100. Great post!
Kalen @ MoneyMiniBlog recently posted…3 Ways to Start Investing for Retirement With $100 or Less
Yea, it seems like we’re in the minority. A lot of people barely have any cash. Thanks!
Hey Andrew, I agree that having cash is pretty important. However, I leave the house with $20. Never more, never less. I lived in a particularly ghetto area in Florida for a while and being robbed sucks! After the second time, I decided I needed cash, but never needed to carry too much. The funny thing is, I was never robbed again, but the habit stuck.
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I might have $2 in cash. I never carry cash. I spend it more easily than using a credit card and I am likely to lose receipts, so I like being able to track spending. Also, if a panhandler asks me for money, I can say I don’t have any cash on me.
Kim recently posted…What To Do If You Hate Your Job
Really, I always thought it was easier to spend when using credit!
Its so much easier to turn down a panhandler if I’m telling the truth about not having anything. I’m a horrible liar.
Kate@GoodnightDebt recently posted…Plan before you Churn Credit Cards!
How about those $3? =)
I have $3. Cash always seems to burn a hole in my pocket, so I try not to carry it. I also seem to forget about anything paid for in cash. I like having my credit card statements be a full account of my spending.
Nothing…I keep my wallet in one pocket and money separately in another. 🙂 The pocket with money only has $3 at the moment though. But for the most part, I pay with credit whenever possible and we just pay the bill at the end of each month.
A Frugal Family’s Journey recently posted…Recent Buy – Aflac Inc (NYSE: AFL)
Haha…just curious why you don’t keep your $3 in your wallet? I pay with credit card too, but still feel the need to carry some cash (more than $3!)
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I probably have a couple of hundred dollars in my purse, when I visit my daughter in the UK, she has just change and about hundred pounds and debit cards. (Some parking machines only accept notes/coins or debit cards, so it is just depends on where she is going).
Yea, I think the younger generation has moved to a cashless society…but you need cash sometimes!
I’m so bad with money.
So I get my cash at the beginning of the month and put everyday 1/30 of the monthly budget in my wallet.
I try not to spend more than I have in my wallet and the most of the time it works.
In Germany there is no credit score with your credit card.
We only have the SCHUFA: If you haven’t paid back a loan in the past and you still owe someone money you should have paid back by now and your creditor has officially proven you still owe him money, your name is in the SCHUFA data file. If you pay your credit in time, your name won’t appear.
Thanks…I’m learning a lot about Germany from your comments. I know people who are the same way with money as you so they prefer to keep a set amount in their wallet so they won’t overspend. You have to do whatever works for you.