Why I Try to Avoid Using Cash at All Costs

Some people say cash is king. I beg to differ.

There's a reason people are commonly advised to proceed with caution in using credit cards. Credit cards can pave the way to piles of debt. That, in turn, can cost a lot of money in interest charges and damage credit scores.

Though some people try to use their credit cards sparingly, I use mine whenever it's an option. In fact, I try to avoid paying for purchases in cash. Here's why.

There are no rewards for paying in cash

When I buy something using cash or my debit card, I reap no reward. It's not like the cashier I hand a $20 bill to hands me $0.50 back as a thank you for stopping by the store. When I charge my expenses on a credit card, I get cash back for those purchases. Depending on the credit card and spending category, that cash back is sometimes generous.

On one of my cards, I've accrued around $500 in cash back so far this year. To me, that's $500 of free money.

Cash is harder to track

Racking up rewards isn't the only reason I favor credit cards over cash. I find that paying with cash makes it harder for me to track purchases and stick to my budget.

Before the pandemic, I dined out at restaurants somewhat often with friends, and we generally split the bill. But to make life easier on our servers, we frequently paid cash rather than using four or five credit cards. But I also remember losing track of how much I spent at restaurants because of those cash payments.

While it's easy to argue that using a credit card can lead to overspending, I've had the opposite experience. Putting the bulk of my expenses on a credit card helps me spend less, because I check my credit card balances every week. If I see that I've spent more than usual, it triggers a warning to cut back for a few weeks to avoid a massive bill.

What's the better choice for you?

Some people prefer paying for purchases in cash, and if you're one of them, that's okay. I have reasons for limiting my use of cash as much as possible. Not only does cash, for me, mean trickier budgeting and fewer rewards, it's also inconvenient having to run to an ATM all the time.

There are still things I have to pay for in cash. One of my favorite summertime farmers markets, for example, is cash-only. But for the most part, I try to use a credit card for everything from my $120 cable bill to my $2 coffee purchases, and it's a system that works well for me.