These days, digital payments and cards are overshadowing cash. But did you know that keeping a stash of money on hand is still intelligent? Here is a list of specific products and services where you should always use cash.
Small Everyday Purchases
It’s wise to use cash for small daily purchases like groceries. Cash makes it easier to control impulse buying because you can see how the money leaves your wallet. This helps you avoid overspending and save more. Plus, using cash for small buys can prevent overdraft fees from credit or debit cards.
Gas Stations
Many gas stations provide cash discounts because card transactions incur fees. Prices may be marked up for card payments, sometimes by as much as 40 cents. To save money, pay with cash when fueling up. Additionally, using cash can protect you from skimming scams where criminals steal credit card data from gas pumps without your knowledge.
Home Furnishings
New homeowners often spend all their savings on down payments and closing costs, leaving little money for decorating. For this reason, they may resort to store credit for furniture, adding to their debt. It’s better to furnish your home gradually, starting with essential rooms like the living room. Secondhand furniture from Craigslist or friends and family can also help avoid accumulating debt.
Purchases From Craigslist
Speaking of making purchases from Craigslist, sellers on this online platform usually take only cash, preferably in small bills. Be careful if a seller says they accept cards, as card readers can copy your card easily. This could drain your bank account, leading to overdraft fees and a significant inconvenience.
Your Vacations
Vacations are a luxury, not a necessity, so they shouldn’t strain your finances. Using debt to cover expenses like airline tickets and hotels means you’ll spend months working to pay it off. Instead, start saving for your next vacation as soon as the current one ends with a dedicated savings account. If that’s not feasible, adjust your plans to fit your budget by opting for cheaper options like discounted cruises or a resort lodge.
Things You Buy While Traveling
While there’s a risk of theft or loss when carrying cash abroad, it can help in certain situations. For instance, money comes in handy if a market or taxi only accepts cash or a card payment fails. Paying money while traveling also helps avoid hefty foreign transaction charges and prevents overspending.
At Bars or Restaurants That You Don’t Know Well
When you’re away on vacation or in an unfamiliar city, think twice before using your card in unfamiliar places. A brief moment is enough for someone to clone your card without your knowledge.
Leaving Tips in Restaurants
Whether you pay in cash or use a credit card for your restaurant meal, be sure to leave a cash tip. Sometimes, servers must wait a while to receive credit card tips, and employers may deduct fees from them. Cash tips ensure servers get their money immediately and could leave a positive impression on your next visit.
Things You Might End up Returning
When buying something you might return, opt for cash. If you use a card and need to return the item, expect delays in getting your refund. Stores usually refund according to the original payment method, often taking days for card refunds to appear in your account. Cash refunds, however, are immediate upon returning the product.
Items at the Farmers Market
Most sellers only accept cash at farmers’, flea markets, and craft shows. This is likely because they must pay fees to process credit card payments. So, carrying cash is a good idea when buying from farmers or local creators.
Government Offices
While in some states (Connecticut, Colorado, Maine, Massachusetts, and Kansas), it’s against the law for businesses to impose credit card surcharges, government entities can still do so. This means using cash is usually cheaper at places like the local court, DMV, or the post office, where you might face extra charges for using cards.
Your Taxes
Paying taxes using your credit card often incurs fees. You’ll typically face a payment processing fee between 1% to 2%. Moreover, unless you clear your balance each billing cycle, you will also be charged interest by your credit card company, which averages around 15.78%.
Your Car
Paying cash for your car saves you from paying interest on something that loses value and allows you to invest your money for better returns. If you can’t afford something expensive like a Bentley with cash, consider opting for a more affordable car model. Paying upfront hits harder than spreading payments over the years, significantly if interest rates rise after promotional periods end.
Your Rent
If your landlord accepts credit card rent payments, expect a processing fee of 1%-3%, which can quickly accumulate. Even if you’re earning rewards, saving that extra money each month is better than paying unnecessary fees.
Medical Bills
Avoid using a credit card to pay for your medical bills. It could lead to high interest charges (surcharges can be as high as 4%) and harm your credit score. Instead, talk to the financial office at the medical facility about setting up a payment plan. It’s a cheaper and less stressful option for you and your family.
College Tuition
Around 85% of colleges accept credit cards but with a 2% to 3% surcharge. But is it possible to pay for your kid’s education in cash? Many people rely on loans, like borrowing from retirement funds or taking out student loans. You can avoid these by starting a Coverdell savings account or a 529 plan, preferably when your child is born. Saving as early as possible gives you 18 years to cover college costs.
Cash Advances
Cash advance interest rates are consistently higher than regular purchases, and interest accumulates immediately without any grace period. So, if it’s a real emergency and you have no choice, avoid taking out a cash advance on your credit card.
