Experts: Do You Really Need To Carry Cash Anymore?

Money in the wallet.
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Thanks to the rise of crypto, people have been talking about paper money as if it were cowry shells. But there are still times when that C-note stashed in your wallet or a secret cutout in a hardcover book at home can come in pretty handy.

Although you can send money through a text message with Google Wallet or Apple Cash, the modern personal finance strategy still has plenty of room for old-fashioned currency.

GOBankingRates asked the experts to explain why.

Why Is Anything Still Cash-Only in 2022?

When you pay a merchant with a $100 bill, the merchant gets $100. When you swipe your card for the same transaction, the merchant might wind up with only $96. That’s because credit-card processing fees are steep, and some businesses on a budget simply can’t afford to take plastic.

“Most of the time, it is small business owners or stands that refuse these kinds of payments because the network deducts around 4% of the amount to them,” said Sarah Ross, financial adviser and co-founder of CocoLoan. “It can hurt their profit by a huge margin, more than you think, especially if they are just a budding business.”

Or, it might just be your choice of card.

“Another case is when the store does not accept a certain network,” Ross said. “For example, some stores do not accept cards in the AMEX network because it charges more compared to its competitors. If you do not have other cards with different networks, you may be forced to opt for cash payment.”

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Where Am I Most Likely To Need It?

It’s always a good idea to bring cash to places like carnivals and boardwalks, where small standalone kiosks are still commonly cash-only — but plenty of permanent brick-and-mortar businesses won’t accept credit cards or digital wallet payments, either.

“It’s possible when you’re dining with friends at a restaurant that doesn’t divide bills, or you come across a vendor who refuses to accept credit cards, or you’ve reached your credit card limit, or you should tip someone who provides a service, such as a barber,” said financial advisor Abdulrahman Henedy, founder of Financeive.

Cash Pro: Identity Thieves Hate It

If someone catches a glimpse of your cash, the only identity they can trace it to is Washington, Jefferson or Franklin — unlike crypto, paper money truly is anonymous.

“Cash can be a safer way to pay,” said Tom Kelly, CTO of the retirement-planning site “If you’re using a credit card, your information is stored in a database that can be hacked. If someone gets your credit card number, they can potentially charge thousands of dollars to your account.”

Cash Con: Muggers Love It — and When You Lose It, It’s Gone

Flashing wads of greenbacks in the wrong crowd can put a bullseye on your back.

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“Another reason to avoid carrying cash is that it can be dangerous,” Kelly said. “If you’re carrying a lot of cash and you get mugged, you could lose all your money.”

It doesn’t even have to be as dramatic as pickpocketing or purse-snatching. People lose money all by themselves all the time — and when they do, there’s no card to cancel or fraud alert button to push on an app.

Every dollar you’ve ever found on the ground was dropped by somebody who lost it forever — no take-backs.

Cash Is a Crucial Part of an In-Home Emergency Kit

It’s true that any cash you keep at home isn’t earning interest in a savings account or dividends on the stock market — in fact, it’s losing value to inflation.

With that in mind, Melissa Terry, CFA at VEM Tooling, urges people to think of those losses as an investment in crisis-management insurance. If a natural disaster or other calamity shuts down ATMs and credit card machines, cash will be king in those crucial first few hours and days.

“It’s similar to protection,” Terry said. “You pay for it trusting you won’t ever require it.”

So, How Much?

The question of how much cash to keep in your house is an entirely subjective discussion because $100 or $1,000 mean completely different things to different families. Same as in your pocket, not so little that it’s insufficient but not so much that it becomes a target or a loss you couldn’t absorb.

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In survival situations, the rule of threes prevails. A person can go:

  • Three minutes without oxygen
  • Three hours without shelter in a hostile environment
  • Three days without water
  • Three weeks without food

On top of that, most basic survival kits are designed to get you through 72 hours — the critical first three days — so it stands to reason that several experts who spoke with GOBankingRates suggested keeping three days’ worth of cash in your home in case of emergency. It’s also essential to keep a sliver of your stash on your person in case you’re not at home when the emergency strikes.

“Carrying at least a day’s worth of expenses in cash is a good idea,” Henedy said. “You’ll have cash on hand in the case of an emergency while leaving some cash at home.”

Whatever You Do, Don’t Let It Burn a Hole in Your Pocket

If you decide to keep money in your wallet in case of an emergency, it’s up to you to determine what qualifies as an emergency. If you’re a spendthrift with willpower issues, perhaps a stash of cash isn’t the right choice for you.

“It can be easy to lose track of how much money you have,” Kelly said. “If you’re carrying a lot of cash, it’s easy to spend it without realizing it.”

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