Cash or Credit?

[slowtraveler]

I've heard using cash instead of credit makes it easier to spend less but in practice, I find it makes tracking the flow of each penny more difficult. With cash, it's easy to leave a fatter tip or lose track of entertainment expenses.

Does anyone else think credit (payed in full and with no fees) makes spending less easier?

[classical_Liberal]

...

[Bankai]

As with most things, it depends. Spending cash might be better option for someone only starting their financial education. We pay for everything with a credit card as tracking expenses is very easy this way - just download full month's statement as a spreadsheet from online banking and copy paste into master spreadsheet with last few years worth of transactions for easy sorting, searching etc. Takes under a minute, once a month. Now, compare this to keeping all the recipes and then manually inputing data on the spreadsheet... seems like a massive waste of time. Not to mention that you actually need to carry cash with you - some people dislike having coins in their pockets and I'm one of them. Where it could be beneficial though, is if the hassle associated with paying cash actually makes you not buy something.

[Seppia]

Paying with cash is a budgeting 101 tool for novices can't get their shit together (ie several of my friends ). IMO spending with a rewards CC has three functions.

1) The reward.
2) Allows for easy tracking of spending and categorization.
3) Forces me to rehash purchases when reviewing the statement monthly. Could I have satisfied this perceived need in another way?

I only spend cash when there is a discount for doing so, or it's considered customary for the transaction. I agree with OP.

Agree 100%
Unfortunately here in Italy the rewards are very minimal compared to the US, but stillI pay cash only when it's standard to do so or if there's a discount.

[George the original one]

Tinfoil hat: Paying cash keeps someone else from tracking what you are buying.

[Seppia]

My counter to that would be
1- with so many credit cards around, if one was really willing to track with human beings what everybody purchases, it would take more than the current USA workforce.
2- if you buy very little, your data is uninteresting and hence more unlikely to be tracked.
I personally don't care, but I understand why someone could be bothered by it.
I, for example, refuse to use Android because I don't want one company owning all/most of my online info

[rube]

Or the the option in between: a debit card (much more common in Europe then a credit card).

[Seppia]

To a person who is responsible, a debit card seems to have all the downsides of a credit card (trackability by others) with none of the upside (rewards) except for ease of tracking expenses

[classical_Liberal]

...

[stayhigh]

I pay cash for almost everything. No specific reason, just like the feeling when I fold thick wallet like sandwich. Recently discovered contactless payments and I like them as well for being superquick.

[FRx]

I have switched completely to a cash system for the past 2 months and I don't think I am spending any less. But I have noticed something interesting, I am much more careful about spending paper than coins. So I guess that's a real sensation but not sure it has translated to anything otherwise.
I have spent on my card for years and echo the opinions of others that if you are frugal and have a plan with your money then changing from one system to another may not make much of a difference.
At first it was harder keeping track of expenses but I use YNAB and so I have a cash category. Overall the cash/card dilemma is a wash in my case because I have to still use my card to go to the bank to withdraw the cash. I withdraw $600 at a time. I could withdraw less and maybe that would make a difference; I'm not sure.

[Campitor]

I never carry cash. Early in life, when losing money really hurt, I lost a significant amount of cash by accident - it fell out of my pocket. From that day forward I never carried cash. Cards can be canceled if lost - but I've never had lost money returned. Paying by card allows me to automate the electronic tracking of my expenses which makes budgeting and fiscal discipline easier.

[fiby41]

Using prepaid card for taking tickets saves 15% on train tickets and 10% on bus tickets. I have to go to the bus depot to recharge the card once the balance runs down so I've previously switched back to cash on or off frequently due to inertia/laziness.

When I'm with friends I pay for all tickets as only one ticket is generatd, when taking the bus, with the fare times number of people and I know the route, fare and bus stops. They chip in on the food bill, so it evens out, I suppose.

All other bills, for data, electricity etc via debit card because it is convineient.

[IlliniDave]

I don't think using a credit card makes spending less easier, more likely the opposite is the case. I do think using cash tends to help some people spend less. For a number of years after my divorce and shoveling out from under the marital debt I inherited from it I used only a debit card and cash. In the end I caved and got a cash back credit card, straight 1.5% on everything.

However, for me cards do not help with accurate tracking of spending. It might be easy but it is inaccurate. For example I can go to a gas station/convenience store and by gas, beer, a sandwich, etc., and it all gets lumped into "gas/automotive" by my card. Similarly I can go to the grocery store and pick up a prescription, buy dish soap, buy postage stamps and it all shows up as "groceries". I suppose I am fastidious to the point of being neurotic about it, but I simply save all my receipts and once a week go though them and bucket expenses in the categories I determined are most useful to me. I never even look at the summaries the bank provides. Precision and accuracy aren't the same thing.

I almost always carry some amount of cash w/me or keep some at home. It's a matter of principal. I don't want the bank to know absolutely everything I do with my money.

[Jason]

Today I had cash and paid my groceries with it. Just under 1/700 of a Jacob (1) . I liked the feeling and I could tell by the cashier's reaction that it is not the usual mode to conduct a transaction. Although I pay the card off at the end of every month, I still hate it.

On a note of transparency. As someone who has a history of self-restraint issues, I do not like to carry cash as most transactions that only accept cash are not the type of ones I want to be involved with anymore. This is a common tool for those in need of behavioral modification.

(1) Whoever came up with a "Jacob" (Felipe?) fuckin kudos. Its great that ERE has its own nicknames for money i.e. like Benjis and Sticks.

[Forskaren]

I pay my bills through my internet bank. I seldom use cash, but I carry a bill just in case. When I shop online or irl I pay with a credit card. Rewards and cashback has been very limited on credit cards, after that the EU put a limit on how much the credit card companies can charge the one receiving the payment from a credit card.

Still in Sweden, you are more legally protected if you pay with a credit card than if you pay cash or with a debit card. If you for example buy a plane ticket and pays with a credit card, you can legally get your money back from the credit card company if the airline goes bankrupt. There is no such protection if you paid cash or with a debit card.

[jennypenny]

The better question today might be actually choosing to transact (and being aware of the transaction) vs. automatic spending. Subscriptions are one budget leak. Those Orwellian shopping pods and buttons are another ...

[ether]

I like cash b/c it means the merchant doesn't have to pay interchange fees and it allows them to be more creative in profits reporting. I don't understand why merchants didn't fight harder against credit cards, 3% fees are insane for low margin companies like gas, grocery stores, and restaurants.

[unemployable]

I like cash b/c it means the merchant doesn't have to pay interchange fees and it allows them to be more creative in profits reporting. I don't understand why merchants didn't fight harder against credit cards, 3% fees are insane for low margin companies like gas, grocery stores, and restaurants.

There's a cost to handling cash, collecting it, counting it, accounting for where it came from and goes, taking it to the bank, making sure you don't get robbed of it and so on. And always a discrepancy at the end of the day between the cash in the drawer and the day's sales, and it's never in favor of the store. In the old days the goal was to keep the leakage below a percent or so. There's a chunk of your interchange fees right there.

By "be more creative in profits reporting" I presume you mean "hide revenue form the IRS". Not that I blame you for allowing merchants or service providers this option. I do the same, tipping in cash where I can. Did it today with a haircut.

I look at it the other way. If I get 2% back on groceries, I'm the sucker for using cash because I'm paying 2% more. So Kroger knows what I eat. Big deal.

[Farm_or]

1) every transaction that a vendor does with a card, they must pay a small fee to the service. They don't build casinos by giving money away.

2) cash is more tangible. It has physical properties that you can relate your service and labor to. Cards are like monopoly money.

3) cash is finite.

4) cash is inconvenient. (This is a positive.)