Have you ever found yourself staring at your bank account, wondering where all this month’s money went? While everyone has the occasional splurge or bill from a surprise hospital visit, your regular spending habits can also create financial strain.

Credit and debit cards are often unseen culprits when it comes to overspending. One way to limit your spending is to primarily use cash for purchases. If it seems impossible to ditch your card, read on to explore all the perks of using cash.
  
 

BENEFITS OF USING CASH
Making purchases with your card is convenient and quick, but that isn’t always a good thing. When buying feels effortless and your credit card balance is skyrocketing, you put yourself in financial danger. Credit cards present the possibility of spiraling into debt, while debit cards often have overdraft fees.

Conversely, you can never spend more cash than what you have. If you buy only with cash, you’re limited to spending the amount of money you are carrying. Furthermore, your routine purchases take on a new sensory experience. Your trip to the coffee shop or grocery store has consequences, and you can see and feel the dollars coming out of your hands each time you make a purchase.
  
Additionally, using cash decreases your vulnerability for identity theft. Every use of a credit or debit card sends your personal financial information into the world, raising the risk of criminals stealing your payment information and identity.
 
A study from Javelin Strategy & Research found that consumers lost a total of $13 billion because of identity theft and stolen financial information. On the other hand, cash users reduce their risk every time they buy with paper money.
 

  

IN WHAT SITUATIONS IS IT BEST TO PAY WITH CASH?
Cash may seem irrelevant or old-fashioned because of the widespread use of credit and debit cards. However, cash is still advantageous in many circumstances, such as the following situations.

Reducing Your Gas Costs
Who doesn’t want to save money on gas? Most gas stations usually charge consumers the processing fee for credit card transactions. By using cash, you can cut the price per gallon by ten cents or more.

Staying True to Your Budget
Buying in cash will likely help you cut unnecessary expenses, since parting with your hard-earned money is more difficult when it happens before your eyes. If you’re budgeting, paying with cash will help you stick to your financial goals and forgo that $6 mocha.

Shopping with a Small Business
Though most vendors take card payments no matter where you are, cash is still convenient and occasionally necessary for many purchases. For example, your local farmers’ market probably requests that merchants take only cash or charge more for card transactions. Similarly, the small, family-owned businesses in town will likely prefer cash and may upcharge items bought with cards, to cover the cost of the transaction.

Avoiding Card Fees and Interest
According to recent data from the Federal Reserve, credit card accounts carrying a balance have an average interest rate of 16.17%. Therefore, with a credit card, you are spending money you don’t have, and you could be spending double or triple the original amount owed to cover the interest and get out of debt. Some credit card companies also charge annual fees, regardless of cardholder spending.

Cash purchases don’t create debt that compounds interest. Furthermore, you’ll never have to worry about minimum purchase rules, as is the case when using a card at some convenience stores.

Paying Down Debts Before Buying a Home
Carrying credit card debt can affect a lender’s decision to loan you money for a mortgage. If you’re planning on buying a home soon, it might benefit you to start making as many purchases as possible in cash while you pay down your debts. This can help you qualify for better mortgage rates and terms.