Monday, March 19, 2012
Cash Or Plastic
Are you a cash person or a plastic person? I use to be a plastic person until I realized how much more money I was spending when I used my debit card versus when I used cash. Before I started budgeting I use to use my debit card to purchase everything. It was rare that cash would ever be in my wallet. I found it to be very convenient to use my debit card. This all changed when I discovered skimming and when I started researching how much more people spend when they use plastic versus cash.
Dunn and Bradstreet did a study a few years ago where they compared the difference customers spend when using plastic versus cash. Statistically they found that on average you will spend 12-18% more when making a purchase with a credit card as opposed to cash. They also compared McDonald's transaction and discovered that the average McDonald's transaction increased from $4.50 to $7.00. Does that surprise you? Just thinking back when I use to use plastic very often, I found that I would purchase more than I normally would with cash. With plastic you don't actually see the money leaving your hands. You just swipe and go! Spending $100 on your debit card doesn't feel like a lot, but taking a $100 bill or two $50's out of your wallet is surely noticeable.
A few other reasons why I use cash
I have never met any one who had their identity stolen because they forgot their cash at a restaurant or bar.
I have always gotten a better deal when I negotiate with cash versus when I use credit or debit.
Easier to stay within budget
With debit or credit cards, it's easier to spend a little here and there. If you use an envelope system to budget, cash helps you to stick with your budget.
Do you ever wonder why Casino's and cruise lines don't use cash? It sure is no coincidence! Casino's use chips and not cash so gamblers don't actually feel like their spending their own money. Royal Caribbean has a cashless system for their shops, spa's lounges and shore excursions. A SeaPass is given to each passenger at check-in, the pass is activated with a credit card. Think about how brilliant this system is. No cash transactions means passenger's will of course spend more money because they charge everything to the SeaPass. Unless you check your balance often, you can literally spend hundreds if not thousands of dollars on the pass and not even realize it. This system also minimizes theft from employees on board.
Posted by Shondell