I remember hearing my mother’s words, use cash instead of a debit or credit card so you only spend what you have. At the time, I was young and had no idea what financial literacy was really all about, so I didn’t pay much attention to her warning.
I entered college and immediately racked up a few thousand dollars in debt using a credit card that was offered on campus. Getting a student/college credit card was so easy that I not only had one but about three cards that were over-extended by the time I graduated.
I didn’t pay much attention to my credit then until it was time to purchase my first car, and I found out that my credit was shot. I needed to get a co-signer, and that really hit me hard. I’d never had to depend on anyone to get what I needed before, and while I had the money in the bank to make my payments and even had the money for the downpayment, I still needed someone to cosign with me. Luckily, my mother-in-law was able to do it, as my husband’s credit was even worse than mine, and we were able to get our first car.
I knew then and there that I had to get my credit back on track, but I didn’t cancel my cards, I simply froze them so I could no longer use them, and I decided to use my debit card and cash for everything that I needed. What I found out, though, was that I ended up spending more money when I used my debit card compared to when I used cash.
So if you’re in a bind and trying to get out of debt, here are a few reasons you may want to keep cash on hand and use cash instead of a debit card.
It’s Accepted Everywhere
I have yet to meet a place that doesn’t accept cash, unlike my Amex and Discover Card. I’ve even tried to use my debit card at a few places, only to be told that they don’t take it. This can be really frustrating when you’re trying to make a purchase, and it’s not always easy to find an ATM when you’re out and about.
No Temptation to Spend
When I had my credit cards, I would often times find myself swiping them for things that I really didn’t need, simply because I had the available credit. With cash, once it’s gone, it’s gone, so you’re less likely to make impulse purchases that you can’t really afford.
Helps You Stay on Track
By using cash instead of a debit card, you’ll be able to keep better track of your spending. This is especially helpful if you’re working on a budget and trying to get out of debt. When you use cash, you can physically see how much money you have, and when it’s gone, it’s gone. With a debit card, it’s easy to lose track of your spending and before you know it, you’ve spent twice as much as you intended.
Keeps You Accountable
When I was using my debit card, I would often find myself justifying my purchases by telling myself that I had the money in my account to cover them, so what did it really matter? With cash, though, I am more mindful of my purchases and I think twice before handing over those hard-earned greenbacks.
You’ll Spend Less Money
When you use cash, you’re more likely to be mindful of your spending because you can physically see the money leaving your hands. With a debit card, it’s easy to swipe and not think twice about what you’re spending.
You Won’t Be Tempted to Overspend
It’s easy to overspend when you use a debit card because there’s no limit to how much you can spend. With cash, you’ll be more likely to stick to your budget because once the cash is gone, that’s it.
You’ll Avoid Debt
Using cash instead of a debit card will help you avoid debt because you’ll only be able to spend what you have. With a debit card, you may be tempted to spend more than you can afford and end up in debt.
You’ll Be More Mindful of Your Purchases
When you use cash, you have to think about each purchase because you’re physically handing over your hard-earned money. With a debit card, it’s easy to swipe and not really think about what you’re buying. This can lead to impulse purchases that you may later regret.
You May Even Get a Discount
Some businesses offer a discount if you pay cash instead of using a credit or debit card. This is because they don’t have to pay the fees associated with credit and debit cards. Businesses such as gas stations offer discounts for cash purchases.
There’s Something About Cold, Hard Cash
Maybe it’s the fact that cash is physical and you can see it and touch it, but there’s just something about using cash that makes me more mindful of my spending. I’m less likely to hand over a $20 bill for something that I could easily live without than I am to swipe my debit card.
While there are some benefits to using a debit card, such as being able to track your spending and getting rewards points, if you’re trying to get out of debt, using cash instead of a debit card may be a better option for you. By using cash, you’ll be less tempted to make impulse purchases, and you’ll be more aware of your spending.
While there are some advantages to using a debit card, such as convenience and rewards, there are also some disadvantages that you should be aware of.
You May Spend More Money
When you use a debit card, you may be more likely to spend more money because it’s easy to swipe and not think twice about what you’re spending. This can lead to impulse purchases that you may later regret.
You Could Overdraft
If you’re not careful, you could easily overdraft your account when using a debit card. This can happen if you swipe your card without checking your balance first or if you have automatic payments set up and you don’t have enough money in your account to cover them.
Your Information Could Be Stolen
If you lose your debit card or if it’s stolen, your information could be used to make unauthorized purchases. This is one of the reasons why it’s important to keep track of your card and to report any suspicious activity right away.
Cash is king for a reason, and there are many benefits to using it instead of a debit card. If you’re trying to get out of debt, you may want to consider using cash instead of a debit card so you can be more mindful of your spending and avoid debt. Thanks for reading!