Should you stop carrying cash?

Welcome to the age of electronic fund transfers, debit and credit cards, and online banking.

Carrying actual cash in your wallet is now optional, while paying with plastic has become the convenient choice. A recent survey from Bankrate indicated that 9 percent of Americans carry no cash at all.

Of those who do carry it, the majority carry no more than $50, while nearly half carry less than $20. One of the main reasons for this shift are the many advantages of paying with plastic, including the ability to earn points and rewards.

Do you think carrying cash is outdated?

Though ATMs are seemingly ubiquitous, what happens if you aren’t near one? Carrying some cash in your wallet in case of emergencies seems like a good idea, but how much?

Personally, I fall into the “carries $20 or less” category. Most of the time, this suits me just fine. I work at a retail establishment where I can get cash back for purchases with a debit or credit card, in the rare case I know I’ll need cash for something. There are times I regret this habit, and other times when it appears to save me money. Here’s what I mean:

The cash conundrum: Why you shouldn’t carry cash

Loss:

Cash not only takes up extra space in your wallet; it’s also easier to lose. How many times have you discovered that a $20 bill slipped out of your pocket, or got eaten by the washing machine? If you carry cash regularly, probably more times than you can count.

Theft:

For thieves who aren’t tech-savvy enough to steal someone’s identity or avoid debit/credit card theft deterrents, cash is the easiest currency to steal and use without detection.

Overspending: The very real temptation of having cash (when it’s the only accepted mode of payment) often creates a crisis of self-control you wouldn’t even have to struggle with if you didn’t have cash in your wallet. This has been a great money-saving technique for me. Often I’ve been tempted to purchase items at a yard or bake sale, only to realize I have no cash. Of course, this very same blessing in disguise can be a cause of frustration if the purchase is something you really need.

Why you should carry some cash

Emergencies: If your car breaks down and you need to pay a towing service out-of-pocket until your insurance company reimburses you, having cash is beneficial. There are also situations when businesses and venues that normally accept credit cards are unable to because of electrical or computer issues.

Although cash is easier to lose and bulkier to carry, if you keep it tucked away in an inner part of your purse or wallet and don’t get it out unless it’s absolutely needed, you won’t even know it’s there (an advantage if you’d be tempted to spend it). You also don’t have to keep hundreds of dollars in your wallet. Though the $50 most Americans carry should be enough for common expenses, you should base this amount on your usual spending habits. Carry enough cash to cover an average credit card transaction you’d encounter while away from home.

There are both advantages and disadvantages to carrying cash. The most important thing is to be prepared for the unexpected and do what works best for you.