Why Cash?

I feel like I am one of the few people who still use cash. I have great credit and obviously use credit cards all the time. I have friends who are experts at card management and can recite which cards they get the most rebates on for every type of possible transaction. That is great.

I like to pay with cash when I am shopping at any small store or sole proprietor operation. Here is the reason. Each time I pay someone with a card they have to pay a merchant fee of anywhere from 1 to 3%. Granted that fee is worked into the prices of their items, but that fee goes directly to the card processor.

If I buy something for $100 at a small local store then they don’t have to pay, say $2 To the card processor, which is usually a bank. That store owner uses the $100 to pay for something else local and saves that merchant $2. And so on. and on. The $100 is still $100.

Consider if instead of cash we all just used cards and every merchant paid %2. I pay $100 to the first store, but they only get $98, because $2 went to the bank. They spent the $98 using a card, but the place they spent it only end up getting $96.04. They spend that on a card and the place they spent it only gets to keep $94.12. That person takes that money and spends it using a card and the place they spent it only gets to keep $92.24. And the next place only gets to keep $90.40.

So in five transactions the bank made $10 off the original $100. If everyone spent the $100 cash they would have all had more to spend.

I know that cash management has issues. Handling cash is work and then there is the potential of theft, but if it is a small business or someone who does some work for you, consider cash.

If we go to a cashless society it will be hard on poorer people who do not have access to banks at reasonable rates. Or people who have bad credit and pay more interest on credit cards. Or just people who keep themselves out of financial trouble by paying cash. If those of us who have none of those issues stop using cash then stores might stop accepting cash which means that we have a two tiered society. Those who can shop their Way because they have credit and those who can’t.

In order to help those less fortunate, pay with cash once in a while. And pay cash to those who run small businesses. You may miss a some rebates, but it will be a way to help those who need it.