Although paper money might seem inconvenient in the modern world, keeping a few bucks in your wallet can be useful. When using paper money, you become more aware of your spending habits and can mitigate the risk of identity theft, which is associated with debit and credit cards. At the same time, it's important to remember that paper money can easily be stolen and hard to track once it’s spent.
If you draw $100 out of your bank account and spend it, the money is gone and you can’t keep spending. The same can’t be said of credit cards, which you can keep swiping until you’ve run up a hefty bill and interest charges. You are more likely to stick to your budget if you realize you’ve spent everything you’ve allotted for discretionary spending. With plastic, it’s easy to lose track. Paper money also can be given freely and exchanged for goods and services, while credit and debit cards can be declined for various reasons. If you stick to cash, you can’t max out your credit card and get declined.
Better ID Protection
Paper money is an attractive alternative to electronic or point-of-sale credit card transactions. Once money is spent, or even if it’s stolen, it cannot be traced back to you and your identity is safe. Credit card and debit card statements, on the other hand, have personal information that can be stolen. Someone with access to your credit card account, for instance, can get your birthdate, Social Security number or other personal information that allows your identity to be stolen.
Higher Risk of Theft
Cash kept in your home, wallet or elsewhere is prone to theft. Paper money is hard, if not impossible, to trace, making it difficult to recover your funds once they’re taken. With a credit card or debit card, you can place a hold on your account if the cards are stolen. You can also track how your funds are spent by the thief and get an idea of where the thief has gone. The potential and permanent misappropriation of cash is a major drawback of using paper money.
It’s hard to track where you’ve spent your money unless you’re carrying around a notepad to record every purchase you make. For this reason, it can be hard to optimize your spending habits and manage your money when you're using cash. With credit cards and debit cards, you get detailed statements about where and when you’ve spent your money, making it easier to analyze how you might be living beyond your means.
- Photo Credit Jupiterimages/Stockbyte/Getty Images
Pros and Cons of Health Insurance
Health insurance is an important coverage to have. Although most see health insurance as a necessity as adequate coverage can lead to...
Pros & Cons of Online Bill Pay
The ability to pay bills online makes it convenient to manage your finances. Once you enter your creditor's information into the online...
How to Buy Gold and Silver
When inflation rears its ugly head and the stock market gets jittery it might be a good time to hold certain hard...
The Pros and Cons of a Balanced Budget
Both individuals and companies routinely track their expenditures and income, creating and maintaining a working budget. The idea in doing this is...
Pros and Cons of a Paper Health Record
The American Recovery and Reinvestment Act (ARRA) of 2009 created financial incentives for medical facilities to develop electronic medical records systems, as...
Pros and Cons of Cable TV
Approximately 100 million Americans have cable television. Cable television offers packages of channels, of which many are unavailable over the free airwaves...
What are the Advertising Pros & Cons of Using Print Media?
Print media offers high credibility, an enduring message and interactive potential, but costs and clutter are high compared to digital.