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Spend More With Cash or Plastic?

This article was written by in Credit. 7 comments.


Liz Pulliam Weston is suggesting using cash rather than plastic because of an inclination to overspend. I’m a big fan of credit cards. Most offer fraud protection and online reconciliations so I always know exactly what I am spending. When I pay the balance off at the end of the month, it’s also nice to know I’m getting some money back in the form of a rebate. (For me, debit cards are right out — usually they offer no protection and there is the possibility it can wreak havoc on checking accounts, which are sensitive to overdrafts.)

Perhaps the amount of money I would save by using cash instead of credit would outweigh that rebate. I do find myself thinking twice when I have to pay for something with cash. Perhaps on a semi-subconscious level, I’m a better saver when I’m not flashing plastic.

The convenience, safety, and tracking that credit cards offer is too tempting to allow me to stray. Even with my diligent record keeping, I know that there’s an amount of cash I spend every month that somehow misses my scrutiny and doesn’t make it into Quicken. I just consider that a “cost of doing business,” but I think the “lost” money would be much higher if I used cash more. I like my online credit card statements.

Liz offers a good reason for sticking with cash, for those who need spending discipline: With cash, you can’t spend what you don’t have.

Do you find yoruself stopping to think twice about a purchase when you use cash more than when you use plastic?

Updated July 14, 2010 and originally published March 27, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 7 comments… read them below or add one }

avatar SingleMom

I actually spend more when I’m using cash. If I have money in pocket, I feel like it’s money that’s mean to be spent. Even if I don’t need anything, I’ll find “something” to buy.

When I use plastic, I am more aware of what I’m swiping it for and I think about the interest I would have to pay if I wasn’t able to pay it off when the bill comes. It also helps me to track my spending better and keeps me organized.

I guess I’m a weird backwards thinker.

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avatar 2retire

Being a Dave Ramsey fan this has always been his thought and what I have tried to believe. For me personally though, spending cash over using the debit card doesn’t make me stop and think twice. In fact I may be more apt to spend the cash for a particular budget category because it’s there in my hand. If I use the debit card I’m never completely sure how much is left for that category and would most likely spend less.

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avatar mapgirl

Nice redesign!

I think I spend more with cash because I have no idea where it goes. My Quicken Cash Account is always out of balance because not every place gives a receipt. I should probably have one of those note papers in my wallet where I jot it all down. But it’s just easier to pay with my debit card and reconcile it all at the end of the day electronically.

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avatar Suresh

If Ms. Pulliam’s cash suggestion works for some people, more power to them. I just wonder why there aren’t articles that encourage us us to be who we are: adults. Requiring a modicum of discipline in credit card use is not harmful to us. (In the words of that great philosopher Stan Lee, “With great power there must also come — great responsibility.”)

I would have much preferred Ms. Pulliam note the benefits of credit cards that Flexo mentioned: a tally of all of one’s monthly expenses in one convenient place, for example. I would have preferred an article that notes the (marginal) interest you accumulate by not paying cash at every point of sale.

But, you have more than one credit card account, you say? Well, do you have more credit across the accounts than monthly income? If so, why would you be using more than one credit card? Available credit is a cash substitute, not a cash supplement.

Off topic: nice clean redesign, Flexo.

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avatar Nick

Lovin’ the new design. (Any chance of enabling the feature to let us remember our Name, Mail, and Website in the comment fields?)

Liz Pulliam Weston is wrong wrong wrong. Not even taking into account purchase protection and rebates, cash is so much easier to spend because you don’t keep track of it as closely as you do (or should) your credit cards. Credit cards let me use Quicken to monitor my spending by category and look for room to cut costs. Cash–it all goes to the same black hole.

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avatar Scott

You are missing the key point of the article – spending control! Credit cards allow you to accumulate debt by making purchases you cannot afford. Conversely, you can’t spend cash if you don’t have it.

I personally limit my routine purchases to cash and, thus, avoid the propensity to overspend. If you don’t have spending discipline (and are smart enought to realize it) – cash works!!

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avatar Inchoate Random Abstractions

I think twice when I use cash or credit because to me, they’re one and the same. As the author points out, with the credit card, it’s just a tad bit more convenient to tally up purchases at the end of the month, as everyone has noted.

You’d have to get rid of credit cards and all forms of credit completely for Scott’s argument to work. I think it’s just as easy for someone who struggles with overspending to take out a cash advance. They’re using ‘cash’, but it’s still money that they technically can’t afford to spend. The author says that you should leave your cards at home. But that’s unrealistic if one of your primary reasons for having a card is to cover unexpected emergencies. If I’m stranded at the side of the road because my car breaks down, I’m going to need that credit card to hire a tow truck.

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