There are plenty of good reasons to carry cash. You get better control of your budget and will likely spend less than when you use plastic or electronic payments for everything, even a cup of coffee or a candy bar.
Mobile payments and credit cards make sense in some situations. If you’re putting down a deposit on a car or buying furniture, carrying enough cash to cover the costs may be impractical. But relying too much on plastic or electronic payments can be risky, especially in situations where paying with cash is preferable. Here are seven of those situations:
- Power Outage
A power outage that lasts several days can create all kinds of trouble. You won’t be able to pay for purchases with anything but cash because merchants’ POS stations can’t operate without electricity. But they can still accept cash. Disastrous events like Hurricane Katrina kept thousands of people from using debit or credit cards due to network outages. Keeping quantity of legal tender for such emergencies is a good policy for anybody.
- Financial Crisis
A run on the banks is an unlikely scenario in the modern age, but anything is possible if a bad enough financial crisis occurs. We got an uncomfortable glimpse at what can happen with the 2008 financial meltdown. As with power outages, stashing away some case for emergencies could get you out of a pickle if you were momentarily unable to access your bank account.
- Pop Up Retail
When you go to a craft show, flea market, Christmas tree lot or your weekly farmer’s market, chances are most sellers will want cash for their merchandise. Many won’t invest in traditional point of sale systems due to the upfront cost and short sales time frame (seasonal or event-based). Unless you have some cash in your wallet, you could miss out on a purchase you really want.
- Cash Only Please
Some business models only accept cash. The bank fees associated with accepting credit cards or electronic payments are often a burden for retailers. It’s estimated that 55% of SMBs do not accept credit cards. Gas stations and smaller restaurants may offer a discount when paying with cash. Next time you visit a parking meter, laundry mat, vending machine, or even hire a baby sitter, make sure you have cash on hand.
- Restaurant Tips
Even when paying a restaurant tab with plastic, leaving a cash tip is a good idea. Depending on how a restaurant is run, servers may have to wait a week or more to receive tips that are included in a credit card payment. Some employers deduct card fees from the tips. With cash tips, servers get their money right away – and might remember you fondly next time you visit the restaurant.
- Special Occasion Gifts
Everybody likes cash gifts. You won’t see a high school graduate, newlywed or birthday celebrant turn down hard currency. A reported 80% of the millennial generation still carries cash and use it frequently. So rather than slipping a check into an envelope with a greeting card, give them cash. They’ll appreciate it more.
- Travel
Different travelers will have varying opinions on whether to take wads of cash on a trip. There is always the risk of theft or loss, but having cash in your pocket can get you out of some situations. For instance, if you realize a cab driver or market seller will take only cash, or a card payment is rejected for whatever reason, you’ll be glad you have cash. Unfortunately, tourists are often targets for pick-pocketers – you’ll be thankful for the extra cash you kept stored away in your luggage if your wallet or purse is ever stolen while abroad.
No matter the setting, cash is still a welcome form of payment – and in some situations might be the only one accepted. So as convenient as electronic and plastic payments can be, it pays to always have some cash in hand.