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Cash is king, at least for $19.99. If $25 or less will bill buy it, chances are that’s what you’ll use, at least if you’re under 25 or over 45. A Federal Reserve study, “2018 Findings from the Diary of Consumer Payment Choice,” examined how people use cash and found that cash beats cards hands down for purchases under $25 across all age groups.

People still do carry cash. The Federal Reserve report found that the amount of cash people have on hand was $59 in 2017, little changed from previous years. Why is it that people opt for paying cash over using a card, especially for smaller purchases

Most of the evidence is anecdotal, relying on individuals willing to explain why they prefer cash to paying by card, but their reasons make sense. I did a quick, completely unscientific survey just to get an idea of people’s opinions of cash. One person wrote back to me, “It depends! If I’m buying a beer at the local pub—cash. If I’m filling my RV with gas—card. Anything that might have a warrantee— card.” But another response was, “Card, 2% cash back on everything. Different card for gas, 4% cash back there. Everything is inflated, have to try and get some back.” Still another man wrote me, “Cards (debit/credit) for most everything. My cash is my ‘rat-hole’ money!!!!” I can only speculate what “rat hole money” is.

Dollar bills are accepted almost everywhere. Amazon opened no-cash stores, but they backed off and accept real money now, and several cities have even prohibited stores from refusing to accept cash. Even when someone might otherwise use a card, sometimes cash can be the only option to pay because some small stores don’t accept cards. Then there’s the incident at Target a couple of months ago when their online payment portal went down. Wanted to pay with a card? Too bad. Paying with cash? Step right up.

The benefit that people mention most often is convenience. A creditcards.com study found that 40 percent of people prefer cash because it is faster and easier. Just take the money out of your wallet or purse and pay. All done, no hassles, and it’s fast. Yes, it has gotten faster to pay with a debit card than when the chip cards were first introduced, but there must be as many card terminals as there are stores, every one different. Unless you’re a regular at the store, it may take a few extra, sometimes aggravating, seconds to sort out how the terminal works. Some you can put your card in before the cashier finishes ringing up; others if you do that, the whole thing blows up and you have to start again. Then you have to read the screen to find out what you’re supposed to do next. For example if you want cash back, with all of the terminals different, it could move from the upper left corner to the lower right or lower left, or who knows. On each screen snares lurk that can mislead the less–than-attentive or more distracted. Then you get to start all over. Grrr. But with cash, just get the change and out the door you go.

Some gas stations give discounts for cash, but you have to go inside, probably twice, and pay in person, once to give them the cash so they turn on the pump and then to get your change when you’re done. Is it worth the extra 25 cents to 50 cents for 10 gallons of gas to pay at the pump by card?

The tendency to spend less is another reason people may appreciate cash. Using real money is painful. Take it out, hand it over, and it’s gone. As a result, you are more likely to decline the add-ons and extras because spending real money is real and hurts more sometimes.

Plus, if you want to enjoy your purchases more, pay with real money. “Individuals who pay with more painful forms of payment [cash among them] increase their emotional attachment to a product, decrease their commitment to non-chosen alternatives, are more likely to publicly signal their commitment to an organization, and are more likely to make a repeat transaction,” found a 2013 Journal of Consumer Research study. It is because “Consumers must physically part with cash in a transaction, so they can easily feel the money they are spending.” “I use my card. The money in my pocket is too valuable to waste,” one respondent posted to me. Not so much with a debit card and not at all with a credit card because the money doesn’t seem real.

There’s no debt with cash. Use a credit card and the bill comes at the end of the month. Pay with real money and there’s no bill and no interest.

Then there’s the privacy issue. Pay with a debit or credit card and those who want to know can track the purchase, what it was, where it was made, and how much it cost. Broadcast to anyone who has access to bank records, in real time, and to businesses who pay for the information, they can inundate you with offers for their products and services. If you want to keep a birthday present purchase secret from your husband , wife, or significant other, you’d better pay cash. A debit card charge shows up immediately on the bank’s website and a credit card purchase on the bill at the end of the month.

One important warning by financial adviser and friend Sal Boenzi, “I’m currently working on a continuing education class and the topic is Elder Financial Abuse. One of the recommendations listed to help prevent this abuse is to ‘limit the use of cash, and use checks and credit cards instead, which leave a paper trail.’”

Pay with cash and it is anonymous. Pay with a card and all bets are off. One person wrote, “I think that the government is at war with everyone who wants to use cash.”

Cash is easy, but maybe cards are easier and hurt less when we use them. For smaller purchases, cash is convenient and preferred at least by people under 25 and over 45.

By Robert L. Cain

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