by Natalia Jones

Created on: January 05, 2010

Sticking to a cash only policy for your personal finances can seem a bit old-fashioned and it might even feel awkward in a society that has become dependent on plastic, but there are some definite advantages of using the old pay in cash method.

No Temptation to Over Spend

When you pay in cash there is no risk of spending more than you have because it is actually impossible to do that. Credit cards give a bit of flexibility here by allowing users to go slightly over their established limits… for a fee of course. But paying in cash prevents spending more than you have and when you are trying to stick to a budget this is a great thing.

Lower Risk of Identity Theft

Society’s dependence on plastic has created a whole new type of crime. While sticking to a cash only policy doesn’t completely eliminate the risk of identity theft, it reduces the possibility because credit cards are a major part of gaining control of someone else’s identity.

There are No Fees for Paying With Cash

Credit cards are wrought with fees. Interest charges on outstanding balances, over-the-limit fees and even annual membership charges are all common costs of using a credit card. Paying with cash however is absolutely free of charge.

More Likely to Get Discounts Using Cash

Merchants are more easily persuaded to give you discounts when you say you are paying in cash. This is because for every credit transaction that they accept they must pay a fee to the credit card company. While this may already be factored into the price of the item you are about to purchase, it is possible to get discounts if you offer to pay in cash.

Seeing Money Change Hands is Good for Your Financial Psyche

Lastly, there is something to be said about watching your money go to someone else. Swiping a credit card has a built-in sense of safety because you know that while it will be expensive to carry a balance, you can go that route if you really needed to. Handing over your cash though is not so forgiving and the empty feeling you get in the pit of your stomach when you are about to make a large purchase is good for your budget because it will help you to control your spending.

Paying in cash has some big advantages over opting for the ease of credit. It might not be for the faint-hearted but for those who are willing to suffer through the growing pains of letting go of credit for the benefit of increasing savings it is definitely the way to go.  

Learn more about this author, Natalia Jones.
Click here to send this author comments or questions.