When to Pay With Cash and When to Avoid Using It

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Source: Thinkstock

Source: Thinkstock

Credit and debit cards have become the payment method of choice for many consumers, and although debit cards are similar to cash in the sense that the money comes directly out of your bank account, there are times where¬†using actual cash is a better idea. On the other hand, having too much cash around can encourage overspending because it’s easy and convenient. Credit cards often offer reward points, whereas cash can never do that. Also, credit and debit cards include some insurance since most companies will reimburse any fraudulent charges; when you loose cash, you lose it for good.

So when is the right time to use cash and when is the right time to use a check, debit card, or credit card? Some of your decision will be based on your own personal finances and how careful you are with money, but there are certain times that using one payment method is best.

1. Use cash if it’s the only option

Sometimes you will have to use cash. If you go to a yard sale for example, you should bring cash. However, you should decide ahead of time how much you are going to spend, otherwise you will use your cash to purchase impulse items that seem like a good deal at the time but that you probably don’t actually need. If you are looking for a big-ticket item, go through the classifieds and determine exactly which sales you are going to go to.

You also might need to use cash if you are purchasing fresh produce at a farm stand or farmer’s market, bake sale, lemonade stand, or sometimes you will need to send exact cash when sending money for your kids’ school trips or activities. It is also polite to give babysitters cash when possible (unless you pay them for full-time care.) It makes sense to pay sitters for one night of babysitting; many will take a check, but it can be difficult for a high schooler to get to a bank to cash it.

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