Cash or Not?
Neiman Marcus and Target shoppers have recently felt the pain of data breaches, and many are now wondering if cash is a better option than paying with convenient plastic. Although a major shift to cash is not likely, many consumers are returning to using cash only out of fear of compromised cards and data.
There are many benefits to using cash, including:
More conscious spending
Swiping plastic does not feel like spending money, and shoppers who pay with paper are more mindful of the money they spend. When you feel bills leave your wallet and your hand, you are more apt to notice your spending and make more conscious decisions.
If your spending is out of control, switching to cash completely may be a good way to get back on track for this reason. Try taking out a hundred bucks from the cash machine once a week and try to make it last for seven days. This practice can curb mindless spending that adds up quickly.
Retailers love to ask for more info when you swipe a credit or debit card, like your email address or postal code. They use this to market their products to you later, but they do not ask as frequently to customers who pay with cash. As an added bonus, the info you don't give can't be compromised in a data breach.
Although these benefits are real, there are also some downsides to paying with cash exclusively:
There are so many apps available today to track spending, and many automatically keep tabs on your debit or credit card purchases. Using cash may make tracking more of a hassle, unless you do it the old fashioned way with paper receipts and manual input.
No Consumer Protection
Credit and debit cards come with an extra layer of security that cash does not. Once cash is stolen or lost, it is gone for good. If your credit cards go missing, at least you can call and cancel them. If your credit card is stolen and unauthorized purchases are made, you will likely not absorb the cost.
Plastic is Sometimes a Requirement
Credit or debit cards are required by many establishments, like car rental agencies and most hotels. Building a solid credit history is also important when you want to secure a car loan or mortgage. These could be difficult to get if you always pay in cash.
If your spending is under control, it may be a good idea to use a credit card and simply pay off the balance each month. This tactic will help you establish a good history and collect rewards without going into debt.