Cash versus Card: Which is best?

An ongoing debate in the personal finance world is whether it is best to use cash or card for all of your purchases. Cash folks believe it is best because you cannot spend what you don't have. Card folks argue that you are missing out in interest, bonus points, etc. Personally I side with the card people. Here's why:

  • If a card is lost it can be replaced. Cash cannot.
  • I earn bonus miles for every purchase
  • I have automatic electronic tracking of my spending via
  • I am not wasting time and gas going to an ATM frequently
  • I earn interest on my "spent" money until the credit card bill comes
  • I am very aware of my finances and spending habits. I have self control
I use a credit card but the majority of the above can be achieved with a rewards debit card too. You only miss a little interest earned since the money is taken immediately.

I do use cash but rarely. I always have less than $20 on me at any given time unless I have a specific purpose. I would rather earn the bonus points and interest than have a wallet full of notes. I also find that I simply do not track my spending with cash either. All of this made me decide to use cards instead.

What do I use cash for?
  • Highway tolls. In most cases you have no choice
  • Small transactions where the merchant balks at my card
  • Yard/Garage/Estate Sales
  • Establishments that only accept cash.
  • Travel abroad
Cards and cash both have their uses. Here in the USA cards work out way better for me. When I am traveling overseas they are accepted a lot less and usually involve and addon fee. I simply use cash there and withdraw my daily budget (I get ATM fees refunded).

Do what works for you! This is my stance on the debate.