When you see a warning sign to “Beware of Dog” at a neighbor’s house, you know to avoid it because approaching it is potentially dangerous. So why is it then that a pile of cash doesn’t have a warning sign to scare us? In fact, that pile actually attracts us and even rules our lives. Barring those of us that spend our lives contemplating religion and/or the mysteries of the universe, I’m pretty certain that rest of us spend a great deal of time chasing, thinking about, talking about, and even worshipping the almighty dollar. Which is what made the phrase “cash is king” legendary. You may see a dog named “King”, but you don’t usually worship it.
Not too long ago I wrote about the likelihood of a cashless society, and how the worldwide trend is tracking that way including right here in the United States. But there is also a segment of our population that uses only cash for their own reasons. It has become a big part of millennial behavior these days, in part because the younger generation seriously wants to avoid debt. So many of them are saddled with huge student loans and credit card debts from abuse at an earlier time in their lives that they’re now defending their finances by resorting to the use of cash only when paying their day-to-day expenses. But is that really a good idea? Or should you avoid using cash?
We’d all agree that the reckless use of credit and the temptations of fast and easy spending with a credit card can hurt and haunt you. Spending is definitely more controlled with a “cash only” approach. After all, if you don’t have the money you can’t over spend can you? But what is the downside? Here’s a list of some of the downsides that can happen to you when you make cash king of your universe!
9 Reasons to Avoid Using Cash
1. Cash is Expensive
The use of cash is expensive for you, the banks, and businesses in lots of ways. Having cash accessible (dispensing it), guarding it, transporting it, counting it, and processing it costs money. Just know that according to the latest government statistics, using cash will cost each of us about 3.5% more in what we spend on goods and services every year. The effect this has on the people that can least afford the fees and cost is significant, but they may not be able to get the credit they need.
2. Cash Wastes Time
We spend and waste a lot of our time getting our cash. According to statistics, banks tell us that we spend on average 30 minutes per month at ATM machines alone withdrawing cash. When you expand the math, that translates to over $30 billion dollars a year in wasted time across the U.S. That time comes directly out of your leisure time cache so it also affects those business and services that you’d otherwise be spending your time and money at.
3. Cash is Filthy
94% of all the cash you handle is really dirty. It has bacteria and germs that are transferred around by touch and it carries communicable diseases with ease. Since we aren’t exactly in the habit of washing our hands each time we reach into our wallet, the danger is real. Just 6% of any money you touch is actually germ free.
4. ATM Machines are Even Worse
Did you know that the ATM machine you use to get your cash isn’t as clean as a public restroom? It’s literally handled by thousands of people each year and is cleaned rarely if at all, especially if it’s outside in a public area. The more you use one, the riskier it is.
5. Cash is Dangerous
Cash is easily misplaced or lost and if it is, just say “na na na na, hey hey hey, goodbye!” It can be easily stolen and in fact makes you more likely a target when it becomes known you may be carrying cash. Unlike a credit or debit card, there’s no liability protection or recourse except searching around and that’s usually fruitless. Losses of cash total over $40 billion a year in the United States.
6. Cash is Inconvenient
Carrying large amounts is inconvenient and impractical. When you buy a car, you’re not likely to carry a bag around with you are you? Even buying clothing or furnishings can require a wad so really it’s not the most practical way to shop and spend.
7. Cash Lacks Protections
Paying by credit card offers your protections that cash cannot. Whether it’s fraud protection, insurance on your purchase, extension of warranties, or other benefits, cash simply can’t compete.
8. Cash Can Evade Taxation
Cash leaves no paper trail and is fairly easy to hide, launder, smuggle, and cheat with, especially when it comes to taxes. There is a real “underground economy” out there that prospers on cash only and that avoids taxes almost entirely. It goes underground, underreported, and untracked. When criminals cheat the government out of their due, it raises taxes for everyone else.
9. Cash Doesn’t Build Your Credit
Even though you may think you will never use or need credit, I’m here to tell you that you would be wrong. Credit is not only a good safety net, it will enable you to be much more flexible with your purchasing power such as for car purchases and/or a home mortgage. It will establish your payment records and earn you the best interest rates when you really might need that. In some cases, things like car insurance rates and even jobs may depend on your established credit ratings. If you don’t have established credit, you may be considered a risk since the usual reason for lack of credit is that you can’t qualify and not that you just don’t want it.
Even though you may have good intentions and are being ultra-responsible by not abusing credit, there are dangers when you do anything to the extreme. Total avoidance of credit is one of them. Our world is heading more and more towards a credit system and eventually cash will become strictly a collector’s item that you may only see in museums. I don’t think that will be next week, but it could be within your lifetime if you are a millennial.
Do you use cash only in your daily transactions? Do you avoid credit cards at all cost? If so, why? Will you change your habits at some point and can you envision a world where cash doesn’t exist?