Paying with cash or card? Most Americans default to the payment method of using a card, especially since many credit cards have features that allow you to earn cash back or rewards from everyday purchases. However, highly frequented spaces we use these cards in are increasingly being targeted by scammers. Many will install credit card skimmers in these spots to steal credit and debit card information, putting consumers and their money at risk.
As scary as this might sound, the good news is there are steps consumers can take now to protect their finances. One of these steps is choosing to pay with cash instead of card for various transactions. GOBankingRates spoke to two financial experts to get their advice on the best places to pay with cash and why you should use cash instead .
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Gas Stations
Whether you’re popping in to buy a quick snack or need to pay for a full tank of gas, Phillip Parker, founder at CardPaymentOptions.com , recommends using cash.
Parker said the aforementioned scammers will often install credit card skimmers at gas stations to steal card information. By using cash for their payments, consumers can reduce their risks of becoming a victim.
If you’re picking up a big coffee order for several people, like lattes to treat everyone in the office, it’s OK to stick with a credit card and save the receipt afterward for reimbursement purposes. But if your transaction is under $10 and you’re frequenting a local coffee shop, Parker recommends using cash instead on small purchases like coffee.
“Businesses pay fees to accept your card, and for small transactions, these fees usually include a percentage plus a flat fee of around 25 cents on average,” said Parker. “These fees can significantly eat into the profit of small transactions, which businesses need to stay open. Using cash for such purchases helps keep small businesses alive.”
After winding up a great meal at a restaurant, you’ll be presented with the bill and the option to include a tip using cash or credit. Which is the better payment method?
Because a tip is (mostly) still a minor transaction, Oscar Cordoba, manager of external affairs and financial education at Affinity Federal Credit Union , recommends using cash to do it.
This is especially key for patrons on tight budgets. “Paying cash can be a good strategy to stick to a budget as it is easier to control your spending if you only use the cash on hand,” said Cordoba.
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Public Transportation
Because public transit fare on bus lines is often considered a minor transaction, Cordoba recommends paying with cash when possible.
And while some forms of public transit, like rideshares, allow you to pay using the app it’s always possible that a tech glitch could occur within the app that makes it impossible to pay via smartphone. Keeping some cash handy acts as a helpful backup plan.
A few years ago, a survey conducted by Alliant Credit Union revealed some of the top spaces where consumers will use cash to make payments. Personal grooming appointments, such as visits to nail salons, ranked in second place by more than a third or 39% of Americans.
Why use cash in nail salons specifically though? An article from TheStreet said many of these salons work on cash-only models. If you’re not too comfortable Venmo-ing the payment or your salon doesn’t offer the option, keep enough cash handy to pay for your mani/pedi.
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Bars and Nightclubs
According to Parker, two kinds of problems with card payments exist at bars and nightclubs. The first is that your card is taken to a register behind the bar to process the payment. Unbeknownst to the patron, the machine may have a credit card skimmer installed to skim your card.
The second problem, and one almost everyone hears when they go out to a bar or nightclub, involves leaving a tab open. This behavior is encouraged in these spaces, but Parker said it can easily lead to overspending or having drinks you didn’t order added to your tab. Patrons can mitigate this issue by bringing along enough cash to pay for their drinks while staying on budget.
If you do decide to use a card, Parker recommends closing your tab out before you leave. Otherwise, your card will be charged without receiving a receipt and you won’t know what you paid for.
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