Five Reasons to Always Pay with Cash (And Throw Your Credit Cards Away)

November 23rd, 2007 • Related • Filed Under • by admin

Whenever I’m stuck in the line at Wal-Mart, Best Buy or another retail store, it seems that just about everyone is paying with a debit or credit card these days. Plastic is certainly a quick and convenient method to pay for purchases, but I still choose to pay with cash. I still have two credit cards that I charge one or two small items on each month to keep my credit score intact, but the vast majority of purchases that I make are with cash, and here’s why.

You Spend Less – Dunn and Bradstreet did a study a while back showing that the average purchase size on a credit card was over 10% more than the average cash purchase size. That number went up higher in some retail establishments just as fast food restaurants. Whatever the reason, when we pay cash, we end up spending less.

No Finance Charges – A lot of people use their credit cards to pay for small impulsive purchases, and over-time these add up into a big pile of credit card debt if you don’t pay on them every month. If you aren’t under some 0% APY introductory rate and just pay the minimum payments, you could easily pay for your purchase two or three times because of the finance charges that you’ll have.

No Overdraft Fees – It can be very difficult to keep track of one’s checking account with all sorts of bills that come each month, checks you forgot you wrote, and automatic drafts that come out each month. If you don’t keep a good padding of cash in there, it’s very easy to lose track of how much money you have in there and be spending money you don’t technically have. Once $20 overdraft fees start coming in left and right, it begins to hurt!

No Going Over Budget – The cool thing about paying with cash is that you can never accidentally pay too much. At the beginning of the month you can take out exactly how much you plan on spending for that month and nothing more. If you don’t carry your credit and debit cards around with you, you can never spend more than you had hoped to at the beginning of the month.

Get a Deal – If you pay for larger ticket items with cash, you can often get a great deal by paying for cash on the spot. There’s something powerful about cash when it comes to negotiation and it will be very hard for a sales person let you walk out the door when you have hundred dollar bills in your hand.