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I Always Carry Credit Cards, Never Cash. Should I Start?

June 16, 2014
Credit Card Basics, Credit Cards
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There was a time when cash was king, and that’s all anyone ever carried. With the ability to charge purchases on just about anything, and the convenience associated with credit cards, one recent survey suggests people are carrying around less cash than ever before. Is it for the best?

Pro-plastic respondents fear theft, loss, germs

First, recognize that the survey by UK-based VoucherCloud – a coupon site – may or may not be scientifically accurate. We don’t know the methodology used, so always take these surveys with a grain of salt.

However, on its face, 57% of the 2,341 Americans surveyed never carry cash and use credit or debit cards. Sixteen percent said they rarely carry cash. The reasons for this decline in cash-on-hand behavior are unsurprising:

  • 65%: Concerns over safety and the risk of theft
  • 53%: Worried about the risk of losing wallet
  • 44%: Convenience – easier to carry than cash.
  • 39%: Intend to carry cash but forget to withdraw any
  • 23%: Hygiene concerns (Germs! Really)
  • 14%: Don’t have access to cash

Interpreting the results

To me, the germ excuse is a bizarre outlier. That speaks more to the fear spread by silly Facebook memes than anything else. Otherwise, I find it credible that people would carry less cash out of fear of being robbed, since cash is irreplaceable (although some insurance will cover some loss) and credit cards are – plus you aren’t held liable for charges.

Convenience makes sense as well. Carrying cash means having to withdraw it. It’s much easier to slap down Ye Olde Plastic. The fact that credit cards offer more rewards now than ever would also lend credence to this conclusion.

From a behavioral standpoint, some economists won’t be pleased. The U.S. economy has been living on borrowed time for decades, the argument goes, as Americans have literally borrowed their way to prosperity. The explosion in household consumer debt over the last 20 years – of which the last five years of declines has barely made a dent – is evidence of this trend. Thus, the notion that credit cards are being used more than cash is unsurprising.

The downside of charging it

The downside of credit, of course, is when it is used irresponsibly. A few studies show that people are looser with their spending when charging it than when paying with cash. This makes perfect sense. Handing over cold hard cash for a purchase really drives home the cost of the purchase. Charging it on plastic is more akin to, well, Wimpy’s live-here-live-now attitude of eating that hamburger today and paying for it next Tuesday. He never did seem to pay for them, though.

So the dangers of irresponsible use is the problem. If you pay your credit card in full on time, every time, then plastic is a great way to go. Nevertheless, having some cash on hand could get you out of an emergency. Heck, there are times I went to the grocery store at night, and the computers were down. Cash only. There are some restaurants that are cash only. Sometimes you are just in a hurry and want to pay in cash.

» MORE: Why nearly every purchase should be on a credit card

A friend of mine carries credit cards all the time, but withdraws $300 from the ATM about once a month, and carries it around, using it for a variety of purposes.

Except for buying hamburgers.

Cash carrier image via Shutterstock