Remember cash? Those pieces of paper with denominations and portraits of presidents printed on them? Besides rappers using them to make it rain at the club, cash is still accepted almost everywhere by people all over the world to pay for products and services. Yet with the rise in popularity of digital payments along with debit and credit cards, less and less people are carrying around this form of payment.
In a survey by U.S. Bank, they found that 50% of survey respondents reported carrying cash around less than half of the time. When they did carry cash, nearly half of them kept less than $20 in their wallet, and 76% had less than $50. In another survey by Capital One, they found that one in four Americans, and one in three millennials rarely or never carried cash at all.
With the convenience of mobile payments such as Apple and Google Pay, plastic, and peer-to-peer money transfer services and apps like Paypal, Venmo, Cashapp, and Zelle, is there even any point to carry around cash anymore? In some places, such as Amazon Go stores, cash isn’t even used.
Some of the drawbacks of paper money is it is easy to lose or get destroyed, dogs can it just like your homework, or it is left in pockets and ruined in the laundry. Someone who is carrying a large amount of cash risks getting mugged or the money stolen. Using money is slow and inconvenient having to wait to get exact change back from the cashier. You also miss out on rewards from your credit card. Remember your mom always telling you to wash your hands after handling cash? Studies have found 80% of cash had traces of cocaine and 94% had bacteria and poop on it. Yuck. Maybe we really should launder our money.
However, even with all those drawbacks, it is still a good idea you should always carry some cash with you just in case.
Table of Contents
Why You Should Always Have Cash Handy
Splitting the bill
Earlier this year my best friend was in town visiting. Every time he is in town, he will organize an outing at a restaurant with friends who are available to catch up. At the end of this particular get-together, everyone threw their credit or debit card into the pile to hand to the waitress, who promptly made a face, shook her head, and said there was a minimum charge to pay with plastic. What ended up happening was two of the friends didn’t have $15 in cash available to pay for their portion. One friend covered another’s half. We tried to give the other the pile of cash and have him put dinner on his card, but he didn’t want to carry around cash afterwards. Figures…
When eating out, some restaurants won’t mind splitting up the bill into individual checks, but it is usually faster and simpler paying as a single party. For small purchases, it is quicker to pay with cash than writing out a check to reimburse friends. While cash is already rare for people to carry, checks are even rarer. In some cases, depositing a check might require a trip to the bank or ATM. What inevitably happens when someone doesn’t have money available, another friend will loan them the money and hope to be repaid in the future. Don’t be that friend who never has money for their share and also never pays their friends back.
It is Accepted (Almost) Everywhere
Unlike credit or debit cards, cash is almost accepted everywhere by everyone. You can use it to pay the neighborhood kid to mow your lawn just as easily as paying the cashier at the corner convenience store.
There is always a chance plastic will be turned away. I’ve had a store refused to take my credit card unless the purchase was at least $10. Another time I had a taxi come by to pick me up and the driver only accepted cash. You don’t want to be in a situation where you used a service and find out afterward that you need to pay for it in cash.
Some merchants might accept certain cards and not others, such as Discover or American Express. This is usually because those companies charge merchants higher processing fees or the merchant does not think there are enough customers using those cards to bother applying to process them. Should you decide you want to use credit cards only, your best bet is to carry a Visa or Mastercard as your primary card or as a backup if you prefer using AmEx or Discover. But don’t count on it. Kroger has recently banned Visa from their Food Co. and Smith’s grocery stores over their high fees.
Tipping
In many situations, tipping goes more smoothly when you have greenbacks handy. When eating at a restaurant, you can easily add the tip to the check and pay for it with your card. But in other situations where you are tipping bartenders, valets, housekeeping, tour guides, bellhops, or your pizza delivery guy, they might not have a card reader handy so cash is still king.
Waiters and waitresses might also prefer cash tips over credit or debit because they’ll be able to get their money immediately instead of waiting for their paycheck at the end of the week. Sometimes the business might even deduct the processing fees from the tip before adding it to the paycheck, which means less money for your hardworking server.
Cards Could Be Suspended or Denied
Getting your credit card or debit card declined when you need it can be a major embarrassment and inconvenience. Maybe you are on a date or you are holding up the checkout line when everyone’s trying to get home and start dinner.
In one instance, I was buying peanut butter at Aldi and I forgot to put the new replacement card in my wallet and used my old, expired card. I just shrugged and handed over a $5 bill and went on my way out the store with the creamy peanuty goodness instead of telling the cashier I didn’t have money and doing the walk of shame out the store empty-handed.
Perhaps your bank suspected fraud and locked your debit card. In case of actual fraud, you would want this to happen so you don’t end up with an empty bank account. I’ve had a fraud lock happen once when I was on a roadtrip from Georgia. Over the course of a day, I filled up at various gas stations in a meandering path across the country until I found my credit card rejected at 4am in the tiny town of Limon, Colorado.
Sometimes it might even be a problem with your actual physical credit or debit card. We had a customer whose chip wouldn’t read when we were running his card and his wife had to use her card to pay.
The Payment Network Could Go Down
It’s difficult to imagine that an entire payment network could go down in this day and age when hundreds of millions of transactions are processed each day.
This actually happened last year in June 2018 when Visa’s network went down in Europe. What resulted was financial chaos. Nobody could check out at the store. Shoppers abandoned shopping carts full of groceries in aisles. People couldn’t buy gas at the gas stations. People were lining up at ATMs and the machines were out of money within a few hours of the outage. One expert went on the news saying everyone should always carry two means of payment.
If you should carry two forms of payment, what should be the second type that is accepted everywhere no matter if the power is out, the payment network is down, or if there is a national emergency?
Bingo.
It Will Come in Handy During An Emergency
The only type of currency that might be accepted everywhere in an emergency other than money is gold. However, gold bars aren’t as convenient to carry as paper money. The only time cash might not be accepted is if the government collapses or there is a zombie apocalypse. If either one of those things happens, then we have bigger problems to worry about.
Emergencies come in all shapes and sizes. Besides the power going out or the phone and internet going down so the store can’t process credit cards, there is everything from natural disasters to your wallet or purse being stolen or your car getting booted for parking where you shouldn’t be. Having a supply of bills stashed somewhere like in your car or at home so you can pay for the unexpected is always a good idea.
It Can Earn You Discounts
Many gas stations now advertise a cash price and a credit price on their signs. This could result in savings of 5-10 cents a gallon. This is due to business owners needing to pay a percentage of their revenue for the credit card processing fees. This processing fee is usually around 3% to 4% of the cost. On average, the gas station may earn 3 to 5 cents in profit if you pay with a credit card. By getting you to walk into the store to pay with cash, the business can also make money if you decide to pick up a Slurpee too.
Gas stations aren’t the only ones who are offering discounts for paying with cash. Some doctors’ offices will offer a discount for cash because dealing with insurance companies is a lot of paperwork and hassle.
Helps With Budgeting
Studies have found that people spend more when they pay with a credit card versus cash. One study at MIT found that shoppers spent up to 100% more when using their credit card instead of cash.
People spend more with plastic because it is easier to swipe and charge something and not need to worry about actually paying for it until later. The initial pain of parting with your money for an item is delayed until you get your statement at the end of the month.
With cash, there is also a hard limit of how much you can spend. If you go out to dinner and you only have $50, you will be careful picking items out from the menu so you don’t go over your budget. With a credit card, you could have an available balance of thousands or even tens of thousands so there is no immediate penalty for overspending.
Your Purchases Stay Private
There is a reason why criminals prefer cash. It is anonymous and keeps everyone out of their business. Many cheating spouses have been caught because their spouse found charges for dating sites or hotel rooms on the credit card statement.
Even if you aren’t doing anything wrong, there are times you would prefer to keep your purchases private. For instance, say you wanted to surprise your significant other with a present or a vacation.
Credit card companies have been selling their customers’ transaction data to advertisers for years.
There is also the case where Target determined a teen might be pregnant due to the items she purchased from the store and sent her coupons for baby products to the surprise of her father.
Less Chance of Identity Theft
No matter how careful you are with your credit and debit cards, there is always a chance of your account number and information getting stolen.
Handing a card to a waiter or waitress means letting it out of your sight. This means they can always take a second to jot down your number before giving the card back to you.
Even if you do not give your card to anyone, you still have to watch out for card skimmers. Some skimming devices only take a few seconds to install. Thieves have placed skimmers on the card readers at the checkout in stores. They have put them on ATMs at gas stations, inside stores, and even at banks. Gas stations are also regularly targeted by thieves who put the skimming devices on and inside the gas pumps.
You could be extremely careful with your card and still be a victim. It seems not another day goes by that you don’t hear on the news about another retail or online store getting their database hacked and millions of account numbers stolen by the hackers.
When you use plastic, you need to regularly check your account statements to make sure all the charges are correct. Paying with paper currency eliminates this issue.
How Much Cash Should You Carry
Unfortunately there is no right or wrong answer to this question of how much greenbacks you should keep in your wallet or purse. Everyone’s situation is different. When going on a trip or vacation, you might want more money on you and less during your normal everyday routine. You don’t want to carry so much cash that it sets you back financially if you happen to lose your wallet.
My recommendation is to look at the most you normally spend in a day during the course of a week and carry that amount. For most of us, the most money we’ll spend during a week is when we go buy groceries at a regular supermarket. Costco or Sam’s Club doesn’t count because when you are shopping there, you are likely buying quantities that will last you an entire month or two.
According to Perfect Price researchers who analyzed billions of credit card transactions to find out how much shoppers spent on groceries, the average amount spent per trip in May and June of 2015 at the top 10 retailers were:
| Rank | Retailer | Amount |
| 1 | Costco | $136 |
| 2 | Sam’s Club | $81 |
| 3 | Target | $62 |
| 4 | HEB | $59 |
| 5 | Stop & Shop | $56 |
| 6 | Walmart | $55 |
| 7 | Meijer | $54 |
| 8 | Whole Foods | $54 |
| 9 | Trader Joes | $50 |
| 10 | Kroger | $50 |
But if you are single and never cook, then take a look at how much you usually spend on dinner out with tip.
You can also get around carrying a big wad of cash by carrying a second backup credit card, preferably one from a different payment network. If your primary card is a Capital One Visa, then carry a Mastercard from Citibank.
Read more: Why you should always use a credit card instead of a debit card
So how much cash do I personally carry?
Approximately $38, plus or minus a few dollars.
This is comprised of a twenty dollar bill, a ten dollar bill, a five dollar bill, and a few ones. I find this is enough for most minor emergencies for my case. I use a minimalist wallet and have the bills folded from the smallest on the outside to the largest in. If I have a random person walk up to me on the street begging for money because their family was kidnapped by ninjas and they needed money for karate lessons, I can easily pull out a few dollar bills and hurry on my way. The variety of bills also makes it easy to tip without needing to worry about getting change back. When I go out with friends for dinner, I will grab a few extra dollars on the way out the door.
Closing $ense
In this current day and age, cash is becoming less popular but still has a use. With credit cards you get quick checkouts at the store without dealing with getting a pocketful of coins back. You get perks such as purchase protection, rewards points, extended warranties on your purchases, and the ability to track all your spending on one monthly statement.
The advantages of carrying the green stuff comes into play when paying for small transactions quickly that are made in person. Cash is faster than pulling out your phone and asking for someone’s username to do a peer-to-peer transfer. Maybe one day in the future, society will become fully cashless. But until then, having a few dollars in your wallet will still come in handy.
Do you carry cash with you in your wallet or purse? How much do you usually take with you? Were there any situations you’ve encountered when you needed cash and didn’t have it?