Have you considered going cashless this year? While there are benefits to leading a cash-only lifestyle, including making fewer impulse purchases on debit cards and feeling motivated to stick to your budget, using just cash also has downsides that can hurt your financial growth.
Ready to go cashless and receive benefits that can help you stay in good financial health? Here’s why you should go cashless in 2023.
Opportunities To Build Your Credit
Someone who decides to lead a cash-only lifestyle likely does not aggregate much credit card debt because, for the most part, the person does not use credit cards. But using cash also means losing out on chances to build credit, which is necessary any time you want to borrow money (for a home, a car, etc.).
By going cashless and relying on credit cards in 2023, you can build your credit so you eventually can qualify to borrow money for large purchases.
Earning Points and Rewards
If you lead a cash lifestyle, you generally do not earn points or rewards through credit cards. Cara Macksoud, FBS and CEO of Money Habitudes, said the rewards and points programs offered through credit cards are big reasons to go cashless because you can get your dollars to work for you.
“Your conversion is 1.1, 1.2 or even 1.3, depending on airline miles, cash back or the particular program you’re enrolled in,” she said. “The dollar you spend is actually worth more.”
You Can Do Business Faster
According to Visa, it takes an average of one to two seconds to process a cashless transaction. For those using cash, it takes up to six to seven seconds.
Macksoud said going cashless works well in situations where you need to do business quickly, including splitting bills while dining out with friends.
Added Protection and Security
Cash, convenient as it may be, can be easily lost or stolen.
If you go cashless with a credit card, you’ll receive fraud protection through the card provider. Providers conduct regular screenings on card transactions. If their systems find suspicious or unusual activity, they usually contact card holders to verify the transaction was legitimate.
Those who use cash all of the time will need to make regular trips to the nearest bank branch to ensure they have enough money. They also will need to be conscious about the amount of cash they carry — needing a little extra in the event they don’t have enough — and the denominations. A person who decides to choose cash only also might have a harder time breaking down larger bills, for example.
Those who go cashless do not need to worry about which kinds of bills they have and they don’t need to regularly visit ATMs or banks.
What Else You Need To Know
In a cash lifestyle, people can see their money and always know how much they have.
For those who go cashless, Macksoud recommends using an app or automated software to review your transactions. This gives you a clear understanding of how much you are spending.
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