Cash Versus Credit Card

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BUSINESS AND MONEY
We are all familiar with the convenience of credit and debit cards, and there’s no denying that they’re the preferred method of payment for many transactions. But sometimes good old hard currency is preferable. (Although maybe not pennies.) Here are four situations in which greenbacks are a better choice than plastic. 1. When you’re trying to stick to a budget. There are a slew of studies out there that compared cash and card spending behavior, and they all came to the same conclusion: you spend more with plastic. Part of the reason behind this is the disassociation factor: you don’t feel as if you’re actually parting with money when you swipe your card at a terminal, especially if you don’t have to face the bill for a month. Paying cash is the equivalent of a dieter’s keeping a food diary: it forces you to hold yourself accountable for what you buy over the course of a day. This is especially valid when it comes to small purchases, as the few bucks here and there on lunch, coffee and incidental purchases really add up. Using cash, it’s easy to see how quickly they empty your wallet. (MORE: Your Credit Card Rewards Aren’t Worth as Much as You Think) 2. When you’re shopping at a mom-and-pop store or a farmers’ market. More Americans are taking pains to eat and shop locally these days. Often that impulse is driven by a desire to help out the little guy rather than funnel spending dollars to the big-box chain stores. It’s a commendable sentiment, and one that small-business owners and farmers certainly appreciate. But when you hand over your credit or debit card, you’re undoing some of that good intention. We’ve written at length about interchange fees, those obscure charges banks levy on merchants who accept plastic. Here’s the short version of why they matter in this case: paying with plastic sends as much as 3% of your total purchase price to the banks instead of to your local dog groomer or florist’s bottom line. 3. When you’re at a flea...
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