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3 Reasons to Use Cash and 3 Reasons to Choose Credit

3 Reasons To Use Cash (and 3 Reasons To Choose Credit)

Credit and debit cards have become so ubiquitous, you'd be forgiven for thinking physical cash is just a couple years away from being declared obsolete and worthless by the government.

Well, as it turns out, the death of dead presidents is greatly exaggerated, as over $1.25 trillion still circulates around the United States alone.

Way too many people use cash for it to ever go away completely, regardless of how much plastic gets wiped every day.

So why in the world would anydiv still pay with Georges and Bens? Here are a few good reasons why:

Less Chance of Identity Theft

Few things are scarier than hearing that the store you regularly swipe your card at just had a security breach, and that some anonymous criminal may have your identity at their disposal.

Paying cash eliminates that issue -- chunks of metal and pieces of paper stacked in a register tells fraudsters absolutely nothing, while the information sent to vulnerable computers via your bank card can reveal everything.

Easier to Watch and Control Your Spending

Actually seeing the cash you owe, as opposed to simply staring at a generic card with no monetary value of its own, can remind you to spend less overall, since all of a sudden the money is real, and real valuable at that.

Financial guru Ramit Sethi, for example, lost his credit card, and spent nothing but cash until a replacement came. He reported spending 18% less when forced to watch his green wad dwindle in real-time.

Some Places Still Don't Take Plastic (or Require a Minimum Purchase Amount)

Amazingly, over half of all small businesses won't take cards, likely because they can't afford the fees.

It's always good to keep at least some cash on you in case you need to make a purchase from one of these places.

Even if they accept cards, some of these businesses might only do so if you spend X amount, in order to override the fee.

If you entered the store to spend more than the minimum amount, then swipe away. But if you only want a loaf of bread, and they want you to spend $10 before they'll accept your card, just pay for your bread with bread.

That all being said though, there are several cases where plastic owns cash. Here are a few of those:

Online Purchases

Increasing amounts of items can now only be purchased online and with a credit card, or at the very least are extremely difficult to cover with cash.

Plane tickets, while still technically available at a travel agent's physical office, are usually much, much cheaper online, where you can't obviously use cash. The same thing goes for e-books, MP3s, subscriptions to streaming sites, and the like.

The more you shop online, the more reliant you will become on cards in your everyday life.

ATM Fees Can Pile Up

Unless your bank's ATM is everywhere, then you may often find yourself forced to withdraw your cash from the competition's ATMs, which will cost you anywhere from $2-4 per pop.

This adds up to a ridiculously high amount, as it's estimated that the use of cash costs Americans over $200 billion per year.

While not all of that amount is ATM-related, a large chunk of it is, and could easily be saved with the use of cards.

Smart Card Use Can Help You Build Your Credit Score

Finally, while cash is great, it does absolutely nothing to improve how companies and lenders look at you. Responsible credit card use, on the other hand, not only helps you purchase what you want and need, but helps build up your credit score.

There's a good chance that not having using a card could negatively affect your credit score or nullify it altogether, since you're not giving the credit agencies any information about your financial habits.

So get a card or two, use it when necessary, use cash every other time, and you should achieve a pleasant balance between the two that can only bode well for your fortune going forward.

Whether you use cash or plastic, Mint.com can help you budget every penny of your finances. Click here to find out how!