By Megan Elliott, Credit.com
All I wanted was some cilantro and onions, and I didn’t have the money. Correction: I had the money, but it was in my bank account, not in my pocket. The corner fruit market I go to when I need a couple of quick ingredients only accepts cash for small transactions. My plastic wasn’t going to help me.
My wallet was empty, but my husband had a couple bucks in his pocket, so dinner was saved. But the experience made me remember sometimes it pays to have old-fashioned currency on hand.
Not all Americans agree cash is still king. About a third of people in the U.S. never or rarely carry cash, and 34% said they would go completely cashless if they could, a 2017 ING International survey found.
These days, you can use cards or mobile payments for everything, from taxis to paying the babysitter, meaning it’s easier than ever to live without cash. At some stores — such as Amazon’s brick-and-mortar bookshops — paying with cash isn’t an option. But a fully cashless society isn’t here yet, and there are still good excuses for keeping a few bills tucked in your wallet.
Here are 11 reasons why you might want to pay with cash — or at least keep some on hand.
1. It’s Accepted (Almost) Everywhere
Unlike your American Express or Discover Card, cash is accepted almost everywhere. Most merchants in the U.S. happily take greenbacks for payments, even as they refuse to run your credit or debit cards for smaller purchases. Of course, the flip side of the cash-only (or cash-preferred) business is the one that requires you to pay with a card. That’s a perfectly legal practice, and one common in certain industries. So it’s smart to carry both cash and plastic. (Here are the best low-interest cards to consider.)
2. It’s Useful in Emergencies
Credit cards are convenient, until they don’t work or aren’t available. If the power goes out or your wallet is stolen, you’ll be happy you have some paper money tucked in a cookie jar. In fact, the government includes cash on its disaster supplies list, along with essentials such as food, water and prescription medications. Although you shouldn’t hide your life savings under your mattress, $100 or $200 will buy gas or food if the unexpected happens.
3. It Can Save You Money & Hassle When Traveling
You need cash if you’re on the road, especially if you’re venturing abroad. Not only are cards not accepted everywhere, but pockets get picked, ATMs eat debit cards and other misadventures can befall you. Cold, hard cash can get you out of a jam almost anywhere. It’s best to carry a small traveler’s emergency fund on you separate from your main wallet and leave the rest of your cash and a backup credit card in the hotel safe.
4. Your Server Will Love You
You can add your tip to your credit card receipt when you pay the bill for dinner, or you could make your server smile and leave the cash on the table. Your waiter or waitress will be able to collect their earnings right away, rather than waiting for your tip to show up on their paycheck. Plus, restaurant managers sometimes take credit card fees out of tips that show up on cards, which means less for your hard-working server.
Cash is also useful for other tipping situations. The maid or bellhop at the hotel isn’t carrying a Square reader in their pocket, and if you want to tip your Uber driver, you’ll need bills because there’s no way to tip in the app.
5. You Might Get a Discount
Card issuers charge businesses a small fee for processing transactions. Some businesses pass the charge on to customers in the form of an extra fee. Others, especially in states where such surcharges aren’t allowed, offer cash-payment discounts. For consumers, the difference is one of semantics, but the point is sometimes cash will save you money. Cash discounts are especially common at gas stations in certain areas, where you’ll usually save 5 to 10 cents a gallon if you pay with paper rather than a card.
Gas stations aren’t the only ones cutting prices for those with greenbacks. Doctors might slash bills for uninsured patients if they can pay their bill in cash. Jewelry stores might also offer cash discounts.
6. You’ll Spend Less
Do you really spend more when you pay with plastic instead of cash? Studies say yes. Researchers at MIT found people who were told to use a credit card instead of cash were willing to pay more for purchases. Another study found people paying with cash were more likely to focus on an item’s cost, rather than its benefits. In a third study, consumers who were urged to pay cash for small purchases had less debt after six months than those who didn’t receive the same advice.
7. You’ll Enjoy Your Purchases More
Not only will you spend less when you pay with cash, you’ll also get more enjoyment out of what you buy. We have greater emotional attachment to purchases we make with cash than those we put on credit, a study published in the Journal of Consumer research found.
8. You Won’t Run up Debt
If you’re one of the many Americans who have trouble using credit responsibly, going cash-only has a significant benefit: You won’t be able to run up more debt on your cards. Give yourself a cash budget for the week and stick to it. If the money isn’t in your wallet, you can’t spend it.
9. It’s Perfect for Certain Types of Budgeting
Some people give themselves a cash budget to control discretionary spending, but they still use cards for other purchases. Others go all-in with cash, switching over to what’s commonly called the “envelope system.” Popularized by author Dave Ramsey, this approach to budgeting involves dividing all your money for a month into different envelopes — say, $400 for groceries, $200 for gas and $100 for lunches at work.
You only use money from the grocery envelope to pay for groceries, and when it’s gone, it’s gone. The rigidity of the envelope system doesn’t appeal to everyone, but for those trying to live within a strict budget, it works.
10. Your Bad Credit Won’t Be an Issue
So reckless credit card use or other financial problems have tanked your credit score. That means you’ll pay a premium in the form of higher interest next time you need to borrow money. But if you can pay cash instead, you can minimize or avoid the bad-credit penalty. (Not sure where your credit stands? You can view two of your credit scores for free on Credit.com.)
Use hard currency for your next used car and you won’t have to deal with crummy loan terms. At the furniture store, you might not qualify for the special financing, but showing up with a wallet full of $100 bills could earn you an even better deal: a cash discount.
11. Your Purchases Stay Private
There’s a reason criminals like to do business in cash: It’s hard to trace. But even law-abiding citizens who value their privacy appreciate the anonymity of cash transactions.
Aside from the possibility of identity theft, credit card companies and retail stores sell your purchase data, which marketers then use to try to sell you more stuff. In one infamous case, a teen’s purchases at Target clued the store in to the fact she was pregnant. The chain then sent the mom-to-be some coupons for baby stuff, much to the surprise of her parents.
The Cons of Paying With Cash
Cash has advantages, but there’s a reason most of us don’t rely on it exclusively. For one, it’s difficult or impossible to use it in certain situations. If you want to pay cash for your plane ticket, you’ll need to make a special trip to the airport, and renting a car without plastic is difficult.
There are drawbacks to cash that go beyond inconvenience. Cash can be lost or destroyed. You won’t get perks, such as purchase protection, that you get with some credit cards. Rewards points are nonexistent, and some people find it harder to keep track of cash purchases than those on cards. The disadvantages of sticking strictly to cash are enough to make a hybrid solution — cards for some purchases, cash for others — the right choice for most people.
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This article originally appeared on Credit.com.