Beware of Cash! 9 Reasons to Avoid Using Cash

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.

Beware of Cash! 9 Reasons to Avoid Using Cash

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?

12 Comments

  1. Rachel

    Hi Gary! Interesting article. Just the other day I heard on the radio that it is thought that we will live in a “cash-less” society in 25 years. I myself rarely ever have cash and I definitely agree with the points you made. The only time I really ever recommend using cash is for a person who just isn’t able to control his/her spending with credit cards. Cash does limit his/her spending in that way which some people rely on to keep their budget. But as you said, I think it is important that these individuals eventually move towards using cards, if even just debit cards.
    It helps us all out in the long run! Thanks for the tips!
    – -Rachel @ Tidy&Teal

  2. Our local tenants only pay in cash, and sometimes pay 3 or 4 months at a time (college students, so sometimes they are just budgeting their rent money according to the grant cycle.) It makes me awfully nervous to run to the bank with all that cash, both because of fear of theft and the fact that it makes our transactions get more scrutiny at the bank. But they pay regularly and really, that’s what should be important.

    I think there are several cultural factors at play. those of us who regularly use bank accounts take it for granted that everyone has them, but some people can’t have them due to their past behaviors and some cultures don’t have a history that promotes trust of banks. So there’s a real disconnect between the assumptions of the banked and unbanked about cash and card usage and convenience. I’d hate to have to pay cash for most things, but a lot of people without bank accounts find payment systems that rely on cards cause them a lot of headaches.

    1. Good point, Emily, about people’s cultural experiences and their banking habits. Even if you’ve had a bad experience at the bank with overdrafts or other issues, you can always amend your problems by talking to the bank, and if necessary, you can pay any past debt and try to re-establish a relationship. Not using the banking system will definitely have a negative impact if you ever want to buy a home or finance anything.

  3. Ernie

    I’m curious, do you have any idea how much credit cards will cost each of us in what we spend on goods and services every year? I’ve read that the prices of goods and services increases anywhere from 2.5-3.5% to pay for interchange fees and rewards programs. Perhaps we’re paying more no matter what we use.

    1. Ernie, my experience has been that credit cards will average about 3% cost increase to the consumer and the business involved (so your estimate is right on target). I guess in the end, either way it’s going to cost all of us to make any kind of transaction. Perhaps one day when we are totally cashless, the costs of processing will decline and we’ll all benefit.

  4. Jayson @ Monster Piggy Bank

    I use cash and credit cards, but I really prefer using credit card as I can control myself when it comes to using it, and I enjoy all the rewards my credit card offers. Credit card is more handy.

  5. Hey Gary! First time reader of your blog. I agree that using cash isn’t that good. It doesn’t build credit and it sure doesn’t pay me rewards that come with using a credit. It also doesn’t work for you when it sits in the mattress and not in the stock market!

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