Why you Should Always Keep Cash on Hand

dollarsIn the age of the Internet, credit cards, debit cards, and other forms of electronic payment, cash has become a less and less used form of payment.

Before I had more than a few hundred dollars in my bank account in high school, I used cash to buy things at the store or fill up my gas tank.

But as I went into college, my debit card became my primary method of purchasing school supplies, such as textbooks online. Post-college, when I finally got approved for credit cards and started to use them for the big purchases that are inherent in adult life.

I found many benefits to using debit or credit cards over cash. One of them was security. While it is possible to be a victim of identity theft and have someone use your debit card, it is much safer than carrying around a large amount of cash in your wallet, which is much easier to lose or have stolen. Additionally, the Fair Credit Billing Act makes the owner of a lost or stolen credit card responsible for only up to $50 worth of fraudulent purchases.

Using credit cards also helps to build your credit score, which in turn allows you to have your credit limit expanded.

At the same time, I have realized there are, in many instances, advantages to having cash on hand. In spite of its inferiority to credit cards, in some cases such as the ability to dispute a payment and prevent identity thieves from stealing your money, it is much like a game of rock-paper-scissors.

This became apparent after Hurricane Sandy, where thousands of people lost power, including the Internet, and were left with only the cash they had on hand to buy essential items.

Additionally, the recent financial fiasco in Cyprus, in which the banks were closed after people attempted to take their money out of their accounts when a tax was imposed on it, proves that you don’t want to be reliant on an ATM or the nearest bank being open in order to access your money at a time of need.

As I see it, there are several good reasons to have cash either on hand or somewhere accessible in lieu of banks or credit cards.

One is in the event of an emergency. If a storm knocks out power and the nearest store is only taking cash, your $3,000 limit on your credit card or in your checking account won’t do you any good compared to the guy who has $300 in cash in his hand. If there is an even bigger crisis, where you are unable to get to the bank and the Internet  doesn’t work, it doesn’t matter how much money you have in a bank or a credit union. All that matters if how much cash you have with you.

But the truth is it does not really matter what kind of emergency it is. It could be only minor, such as your credit or debit card not working at the store (which happened to me once), or you forgot to put them back in your wallet when you left home (happened to me twice).

If you are going to keep a sizable amount of cash at your residence be sure to get a decent security box or safe to store it in. Keep it out of sight and somewhere secure. When carrying cash in your wallet, it really depends on how much you feel you need compared to the risks involved if you lose your wallet or have it stolen.

Cash is also preferable to those who value their privacy or like to stay off the grid. Now that practically every financial transaction is monitored, controlled, or regulated in some manner, using cash when making purchases is one of the few remaining ways to keep your life private in some manner.

photo by Images_of_Money

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Written by TJ

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