Banking Category Banking: the easy, simple banking guide

Advantages and disadvantages of paying with cash reports that more and more cash-only businesses are weighing the pros and cons of their payment system. Much advancement in technology, particularly on the Internet, deters or prohibits cash payments. In an ever-changing marketplace, consumers should consider the pros and cons of paying with cash.

Spending Within Your Means

The simplest advantage to paying with cash is the limitation it puts on what you buy. Without a buy-now-pay-later mentality associated with credit cards, you will purchase only items that are affordable and covered by the cash you have on hand.

Keeping Debt at Bay

Between 2006 and 2007, Americans racked up £1.6 trillion in debt, mostly from credit card usage, according to Financial Web, which also reports that more than 8 per cent of households have credit card debt exceeding £5,850. Interest rates, annual fees and other charges can make a consumer's monthly credit card bill skyrocket and get them into a vicious cycle of debt that is difficult to overcome. By paying with cash, consumers may protect their credit and avoid unneeded debt.

Protecting Your Identity reports that as of 2008, fraudulent use of credit and debit cards is one of the top three complaints of Internet fraud by consumers. By using cash, you protect your identity and your credit.

Limited Shopping Opportunities

Online shopping is 100 per cent reliant on credit cards, debit cards and other payment-transfer services that are Internet based. The Internet is a cash-free zone.

Limited Record Keeping

Consumers generally need a receipt of purchase in order to make a return or exchange on a product. Many retailers can access a transaction made on a credit or debit card by entering a buyer's card number into their system and moving forward with the transaction; there is no reference information associated with cash transactions.

Purchases made via credit or debit card are easy to track via statements and online banking. Consumers must keep a purchase log to track their cash spending.


Consumers can cancel their credit and debit cards soon after they discover them lost or stolen. There is no accountability, however, for lost or stolen cash. Because there are no identifying factors to relate a dollar bill to its owner, it is highly doubtful that lost cash will be returned to a consumer. Carrying large sums of cash may also pose a security threat; large bills especially should be kept in a secure place such as an enclosed purse.