How much cash do you keep in your wallet?
We are regularly becoming a cashless society with credit cards and digital transactions becoming the primary forms of money transfer. Even mega-company Starbucks continues to play with the idea of a completely cashless store, only accepting credit cards and mobile apps.
More and more people don’t carry cash anymore. When going out, we take our phone, ID, and credit card. With those, you can pretty much pay for anything. Even then, credit cards are becoming obsolete as phones nowadays can handle most payments.
As people continue their unknowing war on cash. The biggest winners are the four major financial institutions MasterCard, Visa, PayPal and Square. I find myself regularly reminding friends to continue to at least keep some cash on them for the following reasons.
FYI – I keep about $100 in my wallet at all times for these reasons. Again, please don’t rob me. I usually have (3) Twenty Dollar Bills, (2) Ten Dollar Bills, (1) Five Dollar Bill and the rest One Dollar Bills. Always stacked in order so I can quickly grab what I need.
In a cashless society, here’s why you still need cash
1. A Minimum Purchase on Cards – This is probably one of the biggest reasons why everyone should keep some extra cash on them. Most stores require a “minimum credit card amount” usually set at $5 to $10. This is because stores are forced to pay a 1.6% + $0.10 fee to process your credit card. The lower the price, the more it cuts into their profit.
If your store doesn’t have a “minimum credit card amount” it likely means they’re afraid to scare you away and prefer to absorb those extra costs for the extra convenience of their customers. If you don’t have cash, you’ll be required to buy extra things to surpass their minimum $5 or $10 credit card amount, and that’s not frugal.
2. Parking – If you’re frugal, you’re likely willing to park miles away to avoid paying for a parking spot. However, there are times that’s not an option. You’ll need to pay for a spot or worse a valet. If you’re stuck in a situation where a valet is your best option, it’s always easier to have the cash to hand over quickly.
3. When in a rush – There have been a couple of times I’m at a restaurant with coworkers and the server is swamped. The server is trying their best, but everyone is attempting to fit lunch in a 1-hour period. Rather than waiting for the server to process your credit card and return. It’s easier to lay down the cash and return to the office.
4. Soda Machines – It’s impressive to see the number of soda machines that now accept credit cards. However, it’s not yet universal implemented and many machines still only accept cash. In these moments when you absolutely need caffeine, carrying cash is handy!
5. Tipping – I’ve shared my thoughts on tipping before, and I now tip 20% for everything I do. Yet there are many situations, other than restaurants, that tipping is standard and credit card payments may not be an option.
One example was a Bike Bar I recently celebrated with friends (photo below of our Bike Bar). We paid the $234 through their online portal weeks in advance but that didn’t include the tip for our host. After a great trip, we tipped our tour guide with $40 because he went above and beyond. No one had a credit card processing machine on hand, and we didn’t want the extra hassle of finding our host on Venmo or PayPal. So we handed over cash, it’s still the easiest way to transfer money in person.
6. Special Discounts – This relates to #1 with the “minimum credit card purchase”. Many stores offer special discounts to people who pay with cash. This saves the store from paying a credit card processing fee and eating into their profits. Plus you save a few dollars when those savings are passed onto you.
7. When Your Credit Card Breaks – This is a thing. I’ve been at the grocery store many times with my credit card, and the “Chip” unexpectantly fails. Sometimes the card is dirty, sometimes the processing machine doesn’t like the angle of the card. Either way, it’s an embarrassing feeling to hold up a line while a tiny machine angrily honks at you. At times like these, having cash is a quick lifesaver and contingency plan to failing technology. It’s bound to happen, so being prepared helps!
Can you think of any other examples of when you might use cash over a credit card?
Wallet Squirrel is a personal finance blog by best friends Andrew & Adam on how money works, building side-hustles, and the benefits of cleverly investing the profits. Featured on MSN Money, AOL Finance, and more!
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