Many Americans Are Opting To Pay For Holiday Purchases With Cash — Should You?
Written by
Gabrielle Olya
Edited by
Molly Sullivan
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While many people will be doing their holiday shopping with credit cards this year, a surprising amount will be opting to pay with cash. According to a recent Chime survey, almost 1 in 5 Americans use cash for purchasing gifts.
Buying holiday gifts the old-fashioned way has some perks — but some real disadvantages, too. Here’s what you should keep in mind when deciding between using cash or card when holiday shopping this year.
Advantages of Using Cash for Holiday Shopping
Using cash for holiday spending offers several advantages.
“It can prevent the accumulation of credit card debt, which can be a significant benefit during the holiday season and help people save money in the long run,” said Rianka R. Dorsainvil, CFP, personal finance expert at Chime.
“As we know, credit card balances accrue interest, whereas cash does not,” she continued. “And since the holidays are a busy time for many people, using cash can be less stressful for those who are juggling a million things and have trouble remembering to pay their credit cards on time.”
Handling cash can also make you more aware of your spending by making purchases feel more tangible.
“When there is a physical exchange of money for a product or service, it can feel more real than putting the purchase on your credit card, which can help curb impulse buys for many people,” Dorsainvil said.
Opting for cash over credit can also help you stick to a budget.
“Using cash can provide better budget control if the person is intentional about limiting how much physical cash they are going to spend,” Dorsainvil said.
Downsides of Using Cash for Holiday Shopping
Despite its advantages, using cash for holiday spending does have some downsides.
“Cash users miss out on purchase protection benefits, like extended warranties, that many credit cards offer,” Dorsainvil said. “They also don’t earn rewards, such as points or cash back, on their purchases. Cash isn’t a viable option for online shopping, which can be limiting during the holiday season. Additionally, carrying large amounts of cash can pose security concerns.”
How To Decide the Best Option for You
When deciding between cash and credit for holiday shopping, it’s important to assess your personal spending habits and needs, Dorsainvil said.
“If credit cards tend to lead to overspending, cash might be the preferable option,” she said.
However, this isn’t the case for everyone. The Chime survey found that 29% of people feel like spending cash doesn’t “count” as spending money.
“If you’re one of the 29% of people who feel like spending cash doesn’t ‘count’ and you would be more responsible using a credit card, that may be the better option for you,” Dorsainvil said.
Consider your personal financial situation and shopping plans when choosing the best payment option.
“Those who can pay off credit balances promptly may benefit from card rewards,” Dorsainvil said. “Evaluate your shopping plans, as online shopping may necessitate card use. It’s also wise to review credit card terms, understanding interest rates and rewards to make an informed decision.”
You might also take a hybrid approach.
“Some consumers may find that a combined approach, using cash for certain expenses and cards for others, works best,” Dorsainvil said. “The key is to choose a method that helps maintain financial health while enjoying the holiday season.”
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