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The other day I opened my wallet and realized I hadn’t bothered to add any cash to it for months. Somewhere along the way I had stopped making my regular runs to the bank to get currency. Who needs it?
The trend is clear; cash is being used less and less. A recent Gallop Poll found that respondents who make all or most of the purchases with cash dropped from 36% to 24% in the last five years. Those who report making none of their purchases with cash is now 12%, up from 10%.
There are a number of reasons to avoid using cash. It’s inconvenient, it carries bacteria, it invites crime, and you lose out on the many benefits of using a credit card.
But credit cards and other payment methods are not always the best way to go. You probably need cash for a poker game with friends, after all. Here are fifteen more examples of when it’s best to pull out those bills.
1. When You Really Can’t Handle Credit Cards
Financial guru Dave Ramsey is just plain wrong when he says “Responsible use of a credit card does not exist.” What a ridiculous thing to say! I make a lot of money with my credit cards (from bonuses and cash-back rewards, etc.), and I never pay interest.
On the other hand, Ramsey does point out real problems some people have with credit cards. If you spend noticeably more when paying with a credit card, or you don’t pay off your card balances every month, it might make sense to use only cash – at least until you develop better habits.
2. When You Shop at Certain Small Businesses
Sometimes you can negotiate a better price, but only if you offer cash. Once I even convinced a small bookstore owner to sell me a book for 40% off – a discount she probably agreed to because I was standing there with cash in my hand. Here are some of the places where vendors are most likely to agree to a lower price if you pay cash:
- Farmer’s markets
- Flea markets
- Art and craft shows
- Roadside stands
- Many other small businesses
3. When You Give to Charities
When you give to charitable organizations using a credit card, processing fees have to be paid, just as with any business. Sometimes non-profits can pay lower fees, but there is a cost in any case. So if you want all of your money to go to the charity, make that donation in cash when possible.
4. When You Help People on the Street
You might think there is no choice but cash to help a homeless person, but there is at least one homeless man who takes credit cards (“being homeless is my business,” he says). Still, for the most part you’ll need cash if you want to help out someone living on the streets. And don’t forget, even the homeless guy with the card reader has to pay those processing fees.
5. When You Buy Marijuana
Most credit cards cannot be used for buying marijuana, even in states where it is legal for medical or recreational use. You’ll have to pay cash. In any case, since pot use is still against federal law, you probably don’t want a record of your purchases on your credit card statements.
6. When You Buy Lottery Tickets
According to CreditCards.com, in states that sell lottery tickets it is often either against the law to buy them with credit cards or not allowed by the card issuers. In some cases you can’t use a credit card, but you can use a debit card. Still, why leave a record of your gambling habit? Just pay cash.
7. When You Want to Impress People
You can probably impress some people by pulling a roll of $100 bills from your pocket. But maybe you aren’t into ego-tripping for its own sake, and you just want to selectively impress people for specific purposes.
For example, James Altucher suggests, “When you are breaking into a new scene, always use $2 bills.” Always leaving a tip in $2 bills will probably make a waiter remember you, and (hopefully) result in better service. Using them to pay for anything is likely to be a conversation starter, if that’s your goal.
8. When You Go Rummage Sale Shopping
Yes, people can accept credit cards at garage sales, but it isn’t common yet. And in any case, you’re more likely to negotiate a lower price if you’re paying cash.
9. When a Discount is Offered for Cash
Some places clearly offer a discount for cash, and it will almost always be bigger than the 2% or 3% cash-back you would make using a rewards credit card, so why not pay them the way they want to be paid?
About 5% of gas stations in the country still offer a discount for cash, according to BankRate.com. I’ve negotiated a cash discount for a hotel room. A dentist once offered me a cash discount of hundreds of dollars (it was suspicious, but his relationship with the IRS is none of my business).
10. When You Tip (Sometimes)
Apparently restaurants can deduct credit card fees from the tips received by servers. When I learned this I started asking our servers if their employers were taking out those fees. Fortunately, at least according to the servers I’ve asked, the practice is not common.
Still, you may want to ask. If fees are not being deducted pay with a credit card to earn cash-back or reward points. But if the employer is deducting those fees and you want your server to keep his entire tip, pay just the bill with the credit card and leave a cash tip.
11. When You Don’t Trust a Place
When my credit card was used to book a flight from England to Kentucky, I suspected the number had been stolen in a small pub where I used the card. Although I never verified that, I did start to think twice before using my cards in places where employees acted suspiciously when handling credit cards.
12. When You Drink
A survey done by CreditCards.com found that 75% of respondents make impulse purchases, and men in particular are more likely to do so when intoxicated. That may explain that bobbly-headed turtle figurine I bought in Nogales, Mexico. If you’re going to drink and shop, you might want to put a limited amount of cash in your pockets and leave the credit cards home.
13. When There Are Extra Fees for Credit Cards
In most states businesses can charge an extra fee for paying with a credit card. The practice isn’t common, but it happens. Last week I was charged an extra dollar for using my credit card at a local pub. I’ll pay cash next time.
Sometimes the fee is for charges under a certain amount – I’ve seen $5 limits a few times. Your credit card rewards won’t outweigh this fee. For example, a 5% cash-back card would earn you a 25-cent reward on a $5 charge, which is less than any extra fee I’ve seen. In these cases you should just pay cash.
14. When You Want More Privacy
Some of the above reasons to use cash touch on privacy issues, and Business Insider points out that “Mastercard and American Express are selling your data to online advertisers who then use it to target you with ads.” While it isn’t clear who else is selling your purchase information and what other uses it’s being put to, it is a bit creepy.
The Economist reports that information from store loyalty cards and even (sometimes) credit cards is being “mined” and sold to insurance companies routinely. Do you want them to know about your daily junk food purchases?
Do you want the world to know about every purchase you make? If not, consider paying cash for some things to preserve a bit of privacy.
15. When It’s Your Only Option
At least one estimate suggests that more than 14 million businesses in the United States still refuse to take credit cards. Who knows, you might need to shop at one of these for something sometime.
And, of course, many vending machines and parking meters still take only cash.
How often do you still use cash, and where? Feel free to let us know in the comments below.