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Cash or Debit

January 20th, 2008 by Mommie

I still see people in checkout lines whipping out big chunks of cash to purchase items, where as I haven’t seen an actual dollar bill forever! I always use debit. But what are the benefits to using cash vs debit and do they outweigh the benefits of using debit?

Benefits of using cash

- Can only purchase what you’ve predetermined, i.e. if you don’t have the cash you can’t get it. This is useful if you’re on a tight budget

- There’s a huge phsycological factor, seeing the money actually leave your had is much harder than using a piece of plastic, therefore it might be easier to hold onto your green

Benefits of using debit

- You can spend your pennies, as they all stay in your account until you swipe your card. With cash you better get a jar!

- If you need to buy more, you can (as long as you have it in your account)

- Safer than carrying around a wad of cash?

So while there are definite benefits to both, it’s really up to the person and their situation.

5 Responses

Cromely writes:
January 20th, 2008 at 3:11 pm

Actually, I prefer credit cards to debit cards. I consider Credit > Cash > Debit.

The problem with Debit cards is they are tied to my checking account. If there is a mistake (a clerk enters 199.50 instead of 19.95) or there is actual fraud or theft, then my money is already gone while the issue gets sorted out. If the same thing happens with a credit card, then the bank’s money is gone while it gets sorted out.

There are protections with Debit, but it can still take some time. Let’s say something goes wrong, and my checking account gets cleaned out. I may not notice for a day (assuming I check my balance on line everyday) or I may not notice it until I get the NSF notices from the bank.

Once I notify the bank, they’ll probably refund the disputed amount temporarily, and if I win the dispute, they’ll probably make the refund permanent.

In the meantime, all those checks I did write probably bounced, and now I owe NSF fees to my other creditors. If my rent check bounced, I now owe late rent fees.

So while debit cards are convenient, the risks and hassles are too much for me.

I prefer to use a credit card that gives me reward (1%-3% cash back) and pay it off every month.
Rudy writes:
January 20th, 2008 at 7:16 pm

I agree with Cromely. I hardly ever use my debit card. It’s so easy for the vendor to make a mistake and it’s a huge hassle to dispute it. Credit Card frauds/mistakes happen all the time so they handle that much better.

I use Credit Card first, cash a distant second, and debit a way way way distant third.
Steve writes:
January 21st, 2008 at 8:21 am

cash is my preferred method, for the very reasons you listed in your post. Occasionally I’ll use a debit card, but if you lose it, pretty much everything in your account is vulnerable to being taken. Nevermind the cashiers who almost never ask for ID, but so many stores now have self-checkout, or self swiping card readers, you can access the money without even needing a PIN number.
Dexter : Techathand.net writes:
January 22nd, 2008 at 6:31 am

I Will go for cash for sure..
Tip Diva writes:
January 22nd, 2008 at 5:11 pm

I actually use my debit card as credit. If you don’t put in a PIN, you don’t have to pay an extra fee. It’s taken out of your checking account, so it works just like debit.

Plus, my Chase debit card has rewards, and every dollar I spend as credit is a point. I’ve racked up enough points in everyday purchases to get a $25 gift certificate.

Another bonus is that you don’t get a “holding fee” when you take something like gas out on debit.