Cash or Card?

Cash or card? Do you remember hearing that at the store? I remember it all the time a few years ago, but lately it seems like cashiers have given up and just take whatever payment is offered. It also seems like more and more people are relying on debit and credit cards to make their purchases, and not carrying cash around anymore. So that begs the questions- which is better, cash or card?

Cash or Card?

Before we can decide which is better, we have to understand the differences between cash and card. We also have to define what we mean by “card”. There are actually a few different types of cards. There are debit cards, credit cards, and prepaid cards. Each has their own unique advantages and disadvantages.

When “cash or card” first became a common question, it was generally in regards to credit cards. This is because credit cards came first. The first universal credit card entered circulation back in 1950. I can’t believe that they’ve been around for seventy years!


Prepaid cards are basically like credit cards, except that you pay for them in advance. This type of card is typically used to build credit and improve your credit score.

Bank cards are a bit younger. Barclays issued the first ones in 1969, and I don’t remember them being issued regularly by banks until I was an adult. My parents used checks at the grocery store, and my first ever bank account didn’t offer a debit card. Now a days, you will be hard pressed to find a bank that doesn’t offer a card as the primary way to use your money.

What’s the Difference Between a Bank Card and a Credit Card?

The major difference between bank cards and credit cards is whether you have the money or not. A bank card is directly linked to your bank account. When you use it, you are using the money you have available. Usually, you will see the deduction from your account immediately, but some transactions can take longer to process.

"is it best to use cash or card?"
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 Credit cards are not linked to your account. When you use it, the credit company is paying your bill, and you are promising to pay back the credit company. Credit cards use debt as the primary payment method.

What’s the Difference Between Cash and Debit Card?

Using cash is similar to using a bank card in that you have the money. When using the debit card, money is getting automatically deducted from your account, and when using cash it’s getting automatically deducted from your pocket. However, even though both involve using your own money, they aren’t exactly the same and each has advantages and disadvantages.

One of the biggest disadvantages to using a debit card is the possibility of identify theft. I’ve had my card information skimmed a few times at gas stations, and let me tell you that’s not fun. There’s also the possibility that restaurant staff will steal your card numbers when you are paying for food, or add a few extra dollars to tips. You have to be smart about using a bankcard and protect yourself to avoid credit fraud. 

Another big disadvantage of debit is the overdraft fees. If you weren’t budgeting correctly and you accidently go over your available balance, the bank will charge you hefty fees. If you don’t have overdraft protection on, your card will get declined. Talk about embarrassing.

You can protect yourself from over drafting by linking your checking-account to your savings-account, but many banks charge fees for this service as well. It also might have a negative impact on your savings.  

Disadvantages of Cash

I love using cash when I go out, because I don’t have to worry about identity theft. But carrying cash has its own set of risks. If you lose cash, it’s gone. A bank or insurance company isn’t going to believe that you were carrying five hundred dollars on you and reimburse you. If you lose a debit card, you can call and cancel it without losing any money.

Another disadvantage to cash is that you manually have to track your spending. A bank card will record every transaction to the penny – it’s easy to go back and see what you’ve been spending on. With cash, you either have to keep your receipts or remember every time you spent a few bucks to get that level of budget tracking.

What’s the Difference Between Cash and a Credit Card?

Cash is less similar to a credit card than to a bank card. When using a credit card, you are promising to pay back the money, and when you use cash, you already have the money. There’s a reason they say cash is king – and it’s because a merchant will know you have the money and are good for the payment.

But there’s another major difference between cash and credit cards that merchants love. Most merchants are charged a transaction fee for credit card payments. This is why some small businesses are cash only or have a minimum amount for credit purchases. They don’t want to pay the processing fee unless the transaction is worthwhile.

Cash can also give you a bit of negotiating power. When I bought furniture for my first house, I went to smaller family owned furniture stores with a wad of cash. Those stores love knowing they are going to get paid without a paper trail. I used that to my advantage to get a few hundred bucks off the sofa and to get a free coffee table. The proprietor specifically asked me if I had cash on hand when I asked if he’d cut a deal for paying cash.

Is it Better to Use Cash or Credit Card or Bank Card?

And now its time to answer the golden question – the question you all came here looking for answers to. Is it better to use cash or card? And which type of card is best? And the answer to that is: It Depends.

Sorry, I’m sure you were looking for an easy answer. But it really does depend on your situation and what works best for you. Overall, credit cards are the best, because they are the most secure and usually offer sweet perks. But if you aren’t disciplined and can’t use it without putting yourself into debt, it quickly turns into the worst option. There’s always risk involved with those nice cash rewards.


People (Like me!) run into trouble with credit cards because they use them for those reasons (rewards and security) but then neglect to pay them off in full each month.  The next thing they know, those outrageous fees start adding up, and now they are stuck under mountains of debt that they have to dig out of. Not a good time. Now they have to work to pay off their original debt, but also have to pay interest and fees on top of it. Making a minimum payment each month won’t even make a dent in the amount owed.  Remember that before you swipe!

If you don’t think you can pay back off your credit card bill in full every month, it’s probably not the answer. So, the next question is, cash or card (bank card)?

Is it Better to Use Cash or Bank Cards?

That answer depends on you. I prefer to give myself a small cash budget from the ATM every few weeks and use it on everyday purchases an any extras I want without limitations. I don’t get any more when it’s gone. This method prevents me from overspending, and I know my identity is safe.

Others prefer the comfort of knowing that every penny is traceable, and they are good with keeping track of all of their spending in their heads (or with a linked budgeting app) to prevent overspending. They also feel better knowing that they aren’t losing out on anything if they lose their wallet.

So, the true answer is that both options good. Everyone has their preference, so you should use the method that works best for you. And if you have a preference, I’d like to hear about it in the comments!

7 thoughts on “Cash or Card?”

  1. Since we moved to New Zealand, I very rarely carry cash anymore. It’s a real hassle to carry bills and coins that you have to count manually.

    But your point about negotiating power is true. Cash is also more tangible and hard to let go when you’re holding it. This is a tactic my aunt uses when haggling: she puts the amount in the merchant’s hand and says ‘That’s a good amount, right? Deal, yes?’

    • Ha, I love that tactic by your aunt! Sometimes that works! I do think I’d be less inclined to use cash if more of our currency was in coins. It was cumbersome for me when I was just a tourist in Europe, so I think I’d be with you on that!

  2. I actually didn’t know that credit cards came first! That is a surprising little piece of trivia.

    I have been hardcore in all the directions — used debit a lot in high school/university, went all cash at the start of our debt-free journey and now have settled comfortably in a primarily credit-card based budgeting system. There were things I liked and disliked about each option, but at the end of the day, I landed on credit cards because I like the rewards, I hate carrying cash and, perhaps most significantly, credit cards have never been a problem area for me when it comes to debt. I monitor my accounts closely and pay off my purchases as I make them (usually the same day). All this to say I think you are totally correct: what is best really does come down to the person. Makes it hard to answer the “which is better” question for sure, but that personal element is what I love about personal finance 🙂

    • I love that about personal finance too! There isn’t just one answer that works for everybody with most things. When I first started writing about finance, it was hard to get over that the answer is always “it depends”, but now I embrace it.

      I struggle with discipline when it comes to credit, so I try to use cash more often 🙂

      • OH MAN, I went through the same thing! It was a little funny sometimes — I’d be brainstorming and then reach the point where it’s like “OK this or that?” and it would often be “depends!” or “it’s up to you!” haha. A blessing and a curse when it comes to writing.

        That totally makes sense to me re: choosing cash instead. I think if I didn’t get so nervous carrying cash, I would have it on me more. I’m just always so afraid of losing it!

        • It really helps get to the 1000 word count that google loves so much! But I also really love discussing nuance, so I enjoy writing the “it depends” posts!

          I’m more afraid of getting my identity stolen again than losing money, but there aren’t a ton of ATM machines in my area so I’ve been back to using my card more often.

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