Advantages & Disadvantages of Cash

Having cash on hand has drawbacks and benefits.

Out of convenience and necessity, people are using credit and debit cards more than ever before. As of 2010, the average American has at least four credit cards in his wallet, according to the Hoffman Brinker & Roberts website. Additionally, the use of debit cards is so widespread that many merchants no longer accept traditional checks. The alternative to paying with plastic, of course, is paying with cash. This has pros and cons.



Credit card companies and banks often charge fees for providing a credit or debit card, or they charge interest. Even if your bank gives you a debit card that is fee-free, other banks still may charge you fees for using their ATMs to make withdrawals from your account with your card. In other words, cash is free. Plastic isn't necessarily free.


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Theft and Fraud

Credit card companies and banks typically offer some kind of identity theft and fraud protection with your card. They will take steps to cancel your card in the event it is lost or stolen and investigate suspicious card activity. If you use cash, you do not have this protection.


Vendor Acceptance

Although many vendors accept credit and debit cards, not all do. You can use cash anywhere, including in private face-to-face sales where a seller may not be equipped to handle a credit or debit card purchase.


Online Stores

Online vendors cannot accept cash. If you use "the green stuff," you can't utilize the thousands of online stores available and are limited to stores you can physically visit.


Budgeting and Spending

People who use cash spend less than those who use credit and debit cards, according to the Science Daily website. In addition, using cash simplifies budgeting, since you can just look at the cash in your hand to see what's left instead of looking at an online registry or calling your card company for a balance.


Robbery and Charity

When you use cash, others can see that you have funds available. In addition, it isn't possible to trace cash the way you can trace the use of credit and debit cards. This may motivate others to rob you. Those in need also may see your funds and approach you for donations, assuming you have money to spare.


Math Skills

When you use cash, you have to do math mentally in order to make change and complete your transaction. Using cash thus encourages arithmetic development.