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6 Reasons You Shouldn't Pay With Cash, According to Financial Experts

There are a few instances when you should hold on to your hard currency.

Plenty of people still live by the age-old philosophy that cash is king. But while it never hurts to have a few bills in your wallet, technology has changed how we spend our money, making it more likely you'll be swiping a card or tapping your phone for many of your purchases. As it turns out, there are plenty of reasons it might actually be a good idea to hold onto your hard currency. Read on for all the reasons you shouldn't pay with cash, according to financial experts.

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Cards make it easier to track your spending.

businesswoman checking bank statement of credit card while she work at home with computer laptop

The physical act of using cash can be a powerful tool in cutting back on overspending. But while handing over a small stack of bills might work as a reminder, switching over to swiping a card provides a lot of other helpful budgeting controls and abilities.

"Not using cash comes with discipline, but you could also track spending a bit easier since your transaction history is like a ledger," Nadia C. Vanderhall, a personal finance expert and founder of The Brands + Bands Strategy Group, tells Best Life. "I recommend people have multiple accounts to track their expenses and have a designated card to handle a set group of expenses. This gives you insight into if you've already covered that cost, how much you've spent, and where you stand with your budget."

Having cash on hand is inherently risky.


We've all experienced that moment of panic when we think our wallet or purse has suddenly gone missing. Unfortunately, experts say the fear of losing hard currency is deeply rooted for a good reason.

"Carrying cash isn't a great decision because it exposes you to loss, theft, or fraud that you'd otherwise be guarded against using a credit card," says Riley Adams, a certified public accountant and founder of Young and the Invested. "If you lose your cash, you don't have recourse to recover that money."

The truth is that your chances of seeing any lost cash ever again are pretty slim. "Even though you can file a police report in the case of theft, recovery isn't guaranteed, partial or otherwise," he adds. "And credit cards offer the ability to cancel the card or dispute charges made on the card in the case of theft or fraud."

READ THIS NEXT: Never Use Your Credit Card for These 6 Purchases, According to Financial Experts.

You're missing out on the opportunity to build your credit profile.

A close up of a person checking their credit score on a smartphone
iStock / anyaberkut

There's no denying that staying on top of your credit score can be a confusing ordeal. But if you're looking to build a better profile for yourself, experts say that getting control of that ever-important number can be much easier if you stop using cash for the bulk of your everyday purchases.

"Responsible use of a credit card is one of the best ways to demonstrate that you can manage and repay debt," says Kyle Enright, financial expert and president of Achieve Lending. "If you do not have any history of using credit, lenders—such as for a mortgage or an auto loan—will have a difficult time extending a loan, and if they do, may have to charge higher rates."

And it's not just about getting money together when you need it. "Credit can also play a part in auto insurance rates, renting an apartment, and even getting a job you want," Enright adds.

You're missing out on rewards or cash-back opportunities.

swiping credit card at store

Credit cards offer immediate conveniences to customers, including removing the need for a trip to the bank or ATM. But they can also be an easy way to save money on some of your everyday purchases and even provide other benefits like free travel or lodging.

"Cash doesn't offer a rewards system or cash back benefit," says Adams. "By converting those cash transactions to debit or credit card transactions, you can earn some form of reward back for spending money on that card provider's product."

Ultimately, the hassle of using cash may not be as easy as a swipe for saving money. "Some businesses offer discounts for paying with cash generally to avoid transaction fees, but that isn't always the case," Adams points out. "You'd need to negotiate that discount with each business, and it isn't always guaranteed. Going with the sure rewards points or cash back credit is."

You won't get extra protections on your purchases.

woman calling credit card company
Nattakorn Maneerat / iStock

Credit cards aren't just easier to replace than lost cash. Using them to buy items can be one of the easiest ways to ensure you'll be covered even after the transaction has taken place.

"You can gain consumer protections—such as rental car insurance and product warranties that extend the manufacturer's warranty—when you use most credit cards," says Enright. "If you purchase an item, and it is lost, damaged, or stolen, you can use your credit card statement as proof of purchase if needed."

Of course, this can also come in handy when dealing with a bogus retailer. "In addition, if merchants fail to deliver on purchased services or goods, your credit card issuer can step in to help and stop payment if necessary," he says.

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You can only use it in person.

Hands holding credit card and using laptop

New technology has made it so that we can make all kinds of purchases whether sitting on the couch at home or while walking down the street. But while there have been some significant advances in e-commerce in recent years, you'll still need a card of some kind to buy anything.

"You can't spend cash over the internet. We've invented lots of ways to use all kinds of tools online, but spending cold hard cash isn't one of them—and doesn't appear likely to change anytime soon," says Adams. "Debit and credit cards—among other digital forms of payment—can be done anywhere that has an internet connection. This gives you infinitely more flexibility to pay for goods and services."

Best Life offers the most up-to-date financial information from top experts and the latest news and research, but our content is not meant to be a substitute for professional guidance. When it comes to the money you're spending, saving, or investing, always consult your financial advisor directly.

Zachary Mack
Zach is a freelance writer specializing in beer, wine, food, spirits, and travel. He is based in Manhattan. Read more
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