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How much cash should you carry?
Bryan Caplan gets abstract:
At a recent GMU lunch, two economists sparred over the optimal quantity of cash to keep in one's wallet. Economist A holds very little cash, on the grounds that you can pay for virtually everything with credit cards. Economist B holds lots of cash, on the grounds that the foregone interest is virtually nothing, and his time is very valuable.
Whose side do you take, and why? Value of time and foregone interest calculations are welcome.
My view is simple. If you have a job ("economist"), and you live in the safe suburbs, hold gobs of cash, even if you don't want to use it very often. Economists like Bryan stress that people notice monetary opportunity costs but often ignore time opportunity costs, so the bias is toward too little cash on hand. Paying with cash is sometimes quicker, you make fewer ATM trips, and you pay fewer special fees for using non-home bank ATM machines. The cashless society may someday come, but it's not here yet. Don't join it before its time.
Here is an earlier and related post on the tennis ball problem.
Addendum: Greg Mankiw weighs in, hold more cash!
Posted by Tyler Cowen on September 4, 2007 at 05:08 PM in Economics | Permalink
Comments
I usually hold little cash. It's the "lutheran" me acting paternalistically with regards to the wasteful me. I know that with a lot of cash, I spend more.
If I have a lot of cash on me, I tend to find that the likelihood is higher that when the blood sugar gets low in late afternoon (and my discount rate
increases significantly), I will spend it on snacks. I also tend to buy more magazines at the kiosk while waiting for the bus and so on...stuff I always
regret in hindsight.
Posted by: Mikael at Sep 4, 2007 5:18:36 PM
I go to the bank about once a week and get $200-300. Most of these trips combine with a trip to deposit a check or two. But I use credit cards most of the time for spending. I agree the foregone interest on cash is trivial, and I agree one can use credit cards for almost anything. But sometimes credit cards are considerably slower than cash to use. (Lunch, magazines, newspapers). Taxicabs in NY rarely take credit cards at the moment, although that may soon change, and the few that do take forever to make a transaction. Plus my wife takes about $100 per week.
Posted by: Jonathan at Sep 4, 2007 5:26:39 PM
My philosphy is that I should always have enough cash on me to be able to pick up the first round of beers at happy hour -- so about $50 cash -- at all times. Cash is cool. I also find that I tip better to wait staff/cabbies, etc better than if I'm cash poor.
Also, I bank close to my office, and I save more time using the credit card less than I do making a weekly run by the ATM for a decent amount of cash.
Posted by: Brent at Sep 4, 2007 5:27:34 PM
I live in the suburbs, am employed and carry very little cash. (Why use my money when I can play with the bank's money for 30 days?) I pay the entire balance on my ONE credit card at the end of the month. ATM fees? I joined a credit union. What fees?
Posted by: Ed at Sep 4, 2007 5:29:01 PM
I agree on time opp'y costs. When I reach $0 in my wallet, I got to the ATM and get $400 (the most my ATM will dispense at once).
Posted by: Dan at Sep 4, 2007 5:31:41 PM
I don't understand this:
Paying with cash is sometimes quicker, you make fewer ATM trips, and you pay fewer special fees for using non-home bank ATM machines.
You only have to go to an ATM to get cash, so if you never use cash you will never use an ATM...or what am I missing? My paycheck is directly deposited and I use a debit card for almost everything, so I visit an ATM about once a month, usually to buy stamps.
And what are the time-savings that come with paying with cash? You can't be talking about more than a few seconds per transaction.
Posted by: Bob Montgomery at Sep 4, 2007 5:40:28 PM
Don't forget there are hidden costs to using plastic cards. The business pays a slice of that transaction to the card company. I try to use cash at small businesses, like local coffee shops and restaurants.
Posted by: Yogi at Sep 4, 2007 5:44:31 PM
I live in Hyde Park in Chicago, which means I carry very little cash with me.
Posted by: Jar Jar Binks at Sep 4, 2007 5:47:19 PM
I think there's a common irrationality {which I know I share) whereby people tend to spend less when they have to hand over cash rather than electronic details. Maybe it's simply that psychologically, the scarcity involved is far clearer when it is physical scarcity in your wallet, rather than absract scarcity of correctly alinged electrons.
So I find that carrying cash lets me save money.
Though this tends to come in on impulse buys of $15 or more, rather than small change based impulse buys described by the first poster.
Posted by: Richard Green at Sep 4, 2007 5:48:04 PM
I carry enough cash to cover expected expenses for a couple of days even though I intend to use a credit card. Credit cards and the associated technology occasionally fail. If you have no cash alternative, what are you going to do?
Failure can mean something mundane liker a computer or communications problem. It could also mean a hurricane, flood, etc. has thrown modern life back to a cash economy.
Posted by: Fred at Sep 4, 2007 5:48:51 PM
Life is full of surprises and they don't have to be frequent to be worth protecting against when the cost of insurance is low enough.
I've had merchants' credit card processing systems break down when I wanted to make a transaction in a hurry, and have had my logistics change suddenly in ways that required $100 cab fares. This is all above and beyond smaller things like the convenience of not needing to ask waiters to provide multiple checks when trying to split a bill because neither person was carrying cash.
Do these things happen often? Of course not, but the larger ones could have cost an hour or more to solve without cash and often would have caused disruption larger than that to other plans. The annual bank interest (at, say, 2%) on $500 is only $10. I'd be amazed if increasing the average cash balance of an upper middle class person's wallet wasn't worth at least that in convenience gains. The cash only needs to save 20 minutes a year on average for someone who earns $30/hr to pay for itself.
Posted by: Telnar at Sep 4, 2007 5:55:51 PM
These last mirror what I said over on econlog. I have been around in too many odd situations where
unexpected things happened where it was suddenly very handy to have a bunch of cash. So, I am cautious
and keep plenty on hand, even if that means I might get robbed of it sometime. But, hey, a thief can
take one's credit cards as well. They're not much safer in that regard.
Posted by: Barkley Rosser at Sep 4, 2007 6:05:46 PM
When I lived in Hyde Park in Chicago I always made sure I had cash on me. Muggers have a threshold yield below which they become very violent.
Posted by: triticale at Sep 4, 2007 6:07:24 PM
What about cashback and other benefits. Including, developing a strong credit history.
I carry little cash and almost pay by credit card, since I have a card that gives me 1% cash back. Most months I will spend between $500 and $1,500 on the credit card (including things like all grocery purchases and my cell phone bill, gym bill, etc...) and this provides me between $5 and $15 a month extra.
Also, the record of spending and quick payback has a positive effect on my credit report. You should carry some ash for emergencies, but there are really very few places that won't take credit nowadays.
Posted by: lannychiu at Sep 4, 2007 6:13:30 PM
Personally, I still can't stop giggling about the tennis ball post ending with "I feel that twelve balls is too many." Yeah, I'm immature. Eat my shorts.
I myself only carry cash if I know for a fact I'm going somewhere that doesn't take plastic, and I'll actively avoid any such place if it's reasonably convenient.
When I pay with a card, nobody has to make change. If I myself pay with exact change, I waste my time and effort doing so. If I don't, the cashier wastes his time and effort, and I'm stuck waiting around.
I suggest the time savings of never having to wait while change is counted probably outweighs the time savings of using cash, because it is distressingly common that my cashier CANNOT EFFECTIVELY COUNT.
"Your total is $13.79!" "Well, just to make it easy, here's $25.04!" "Uhhhhhhh..."
That seems easy to me. I pull out a twenty, a five, and four of the pennies jingling up my pocket. My resulting change is a ten, a one, and a quarter. But to my cashier, it's a freaking calculus problem. He's so screwed up by the idea, he can't even figure out that if he types "25.04" into the cash register, IT WILL TELL HIM THE ANSWER.
Hidden benefit of not carrying cash: "Got any spare change?" "Nope!" And since I do not in fact have any cash on me at all, zero guilt.
Posted by: Caliban Darklock at Sep 4, 2007 6:13:46 PM
Caliban,
I don't get it. Is it so bad to have two five dollar bills in your pocket rather than a ten? Why not just give the cashier $20.04 if you really want a quarter rather than 21 cents?
Posted by: Mike at Sep 4, 2007 6:27:25 PM
I like my AmEx card that gives me 1.5% cash back (they don't offer this one any more). And my Shell card that gives me 5% rebate on the statement. And my MC for everything else, but that's only 1% cash back when I go over 25,000 points. And all are paid in full every month.
Take my rebates as cash and use that cash throughout the year. Use an ATM maybe once every 18 months.
$200 - $300 once a week is tuition and room and board at most public colleges in Virginia....
Posted by: chug at Sep 4, 2007 6:28:55 PM
It would be helpful to test the assumption that a consumer’s time opportunity costs associated with cards is higher than with cash. My guess is it’s false, especially with advances in contactless payment and signature-free payment for small-ticket transactions. (For example, think about paying at the pump versus walking into the station twice, once to pre-pay and again to collect your change.)
Studies here (http://www.aei.brookings.org/admin/authorpdfs/page.php?id=1060) and here (http://www.aei.brookings.org/admin/authorpdfs/page.php?id=1048) consider an even broader view by pointing out the relatively large time opportunity (and direct) costs associated with cash and checks versus electronic payments faced by merchants, banks, and the broad financial clearing system. In any sort of competitive market, these savings from electronic payments will be reflected in lower prices.
Posted by: john at Sep 4, 2007 6:52:04 PM
I hardly ever carry any cash on me because I find that if I have it then I more than likely will spend it. You can buy almost anything you want if you have a credit card or debit card. If you have a debit card then most of the time it doubles as a credit card and you can withdraw money from an ATM so you don't really need to carry cash on you except for like an emergency situation when you can't use your cards. Cash may be a tiny bit quicker but how long does it really take for you to sign a receipt and be on your way? I side with Econonmist A and his idea that you do not need to carry much cash because you can pay for almost everything with plastic now in the day in which we live.
Posted by: Josh at Sep 4, 2007 7:03:51 PM
Personally, I find I spend a lot more money with more cash on hand. Being a rational consumption smoother, I keep most of my cash at home.
Being an irrational investor, interest rates do not factor into my decision at all. In fact, my first reaction to the appearance of interest rates in this argument was "what the heck are these people talking about?"
Posted by: Robert Olson at Sep 4, 2007 7:15:02 PM
Being a germophobe, I avoid cash. You never know where it's been.
Posted by: Germophobe at Sep 4, 2007 7:26:34 PM
I use my credit card for everything and pay it off every month.
I have my paycheck direct-deposited to a money-market account (4.9%) from which I write
two checks every month: rent and credit card. Since the credit card has rewards:
miles, cash back, concierge services, it benefits me to use it. I carry one twenty
at all times, just in case. If you lose your cash, it's gone. If you lose your card,
all you have to do is cancel it.
Posted by: Anders at Sep 4, 2007 7:32:47 PM
ATM? What is that? I've not been to one in over two years. EVERYTHING gets paid for with my credit card, which gives me double miles. That means, every year, paying 25k on this credit card gets me a $500 airline ticket, for a $39 fee.
I'm uncertain how, if you remove the ATM time costs from your equation, Economist B has any case.
Posted by: shawn at Sep 4, 2007 7:54:15 PM
oh...and...there are places, apparently, that don't take credit cards. I don't shop there.
Posted by: shawn at Sep 4, 2007 7:58:48 PM
I'm a cash guy. I can't stand going to lunch with my friends at work and having to wait for all their debit cards to be run. In addition, that's about $0.25 per transaction for the restaurant owner who has to up prices. What a waste.
Study after study has shown that it hurts less to spend plastic than cash, so I think often paying cash ultimately saves me dollars in the wrong run. I don't have references, but have read studies showing that we tend to spend more on plastic than if paying cash.
Posted by: Shane Milburn at Sep 4, 2007 8:14:06 PM
I get a few hundred from the ATM when I fill up - I feel better when I have at least $200 in my pocket because you never know when you might buy something off the street from someone, etc.
Posted by: Paul N at Sep 4, 2007 8:38:04 PM
Here're my reasons for using credit cards wherever I can:
- it builds credit history
- cash back rebates on grocery and gas
- you get to see your exact spending on your monthly statement
- safer, zero chance of counterfeit, insurance against online fraud, etc
- cleaner
- one month of money sitting in bank collecting interest, HSBC has 5% apy now
- I hate coins
The the big question is, why aren't we living in cashless world yet? It's 21 century, where's my flying car?
Posted by: Hao at Sep 4, 2007 8:54:35 PM
In modern life, where time is one of the biggest restrictions that we have, it is important to save it as much as possible.
I myself prefer to carry more cash with me. This, at any time, gives me the ability to have a better overview on the money that I have already spent during the day than the time-consuming process of checking my bank account via online banking or at an ATM.
I like to use the credit card rather as a reserve for times when I am short of cash than a main payment instrument.
Posted by: Y. E. at Sep 4, 2007 9:13:51 PM
The answer, of course, is 42. Dollars.
Posted by: fustercluck at Sep 4, 2007 9:36:34 PM
I carry cash because sometimes I buy things at places that I do not want a permanent record of.
Also, some places do not take plastic. If that isn't a reason to carry at least $100 in cash I don't know what is.
Posted by: mike at Sep 4, 2007 9:51:48 PM
Cash. It's way faster. And, when you pay your share of a $1000 bar bill, you chuck in a $20 or so per drink and you are done. Let some other drunk try to figure out 20% of 783, and then sign his name to his math.
Posted by: gorobei at Sep 4, 2007 10:20:47 PM
I favor credit cards. It saves on keep track of spending and budgeting, which is important to me. Makes tax time much quicker as I have a record of almost every tax related expenditure already entered into financial software. I also have data for debates with spouse about wasteful spending.
As far as cash, I waste $50-$70 a week and just take out about $300 at the start of every month. That is my budget for trivial expenses not worth tracking.
Posted by: DanC at Sep 4, 2007 10:27:34 PM
BTW my credit card expenses are about $5,000 per month, I pay the balance every month, so I have a $5,000 interest free loan every month. Plus I get various rewards, non trivial, at the end of the year to thank me.
Posted by: DanC at Sep 4, 2007 10:38:48 PM
Well, I mostly use credit cards, just to get the miles, although my rule of thumb is not to do so
for bills under $20, simply out of respect for the costs of the merchants. As I said above, I carry
more cash than most because I have had experiences of having to fork over a bunch to deal with a
difficult, but unforeseen situation, like, a tow truck in the middle of nowhere that does not take
a credit card? Or yes, one finds oneself in an unexpected social situation that involves somebody
else insisting on using their credit card to pay a large bill and you are expected to cough up the
cash to cover your part for them. But, such considerations may not be relevant for many people.
Posted by: Barkley Rosser at Sep 4, 2007 10:46:09 PM
For the most part i don't carry very much cash if any at all. It's not a matter of safety for me, i just don't always have time to go to the bank or an atm being a college student because my check is directly deposited. During the summer and long breaks when i work and get a check i do carry cash but that is only because i am forced to go to the bank to put my check in. I really have no preference on having cash or not because i still have the money on the plastic.
Posted by: ALEX at Sep 4, 2007 10:58:39 PM
I side with the economist holding more cash in hand. Along with the fact that you would spend fewer trips to the ATM, you would risk the chance of misrecording your account and spending more money than you have. Cash is quicker and it does not come with interest rates like a credit card. On the other hand, if some people spend more money when they have cash then it would be a better idea to use a credit card. I think it all depends on the person and how well they look after their account.
Posted by: Seth Black at Sep 4, 2007 11:05:47 PM
In my case I usually carry about fifty dollars on me at all times. I have a debit card that I carry with me that has the rest of my money on it. I feel that if something were to happen and I need to have cash, I would have enough to get me to a bank or somewhere that would take my card. Also, if I have a lot of cash on me I feel that I can spend it more easily than I do when it is on my card.
Posted by: Tyler at Sep 4, 2007 11:26:59 PM
I'm not an economist, but I prefer cold, hard cash. *I* think I spend it slower, but most importantly, I value my privacy highly, and you don't really get that with a card.
For the same reason, I refuse to sign up for RFID-based tollcards. My speeding is between me and myself, I think ;-).
Posted by: Jon at Sep 4, 2007 11:50:45 PM
I'm a little confused. (I didn't read all the comments, some of which may have dispelled my confusion.)
I thought the contrast was between (A) carry cash and (B) credit card. Not between carry cash and (C) going to the ATM to get cash whenever you need it.
Tyler's reasons may apply to (A) versus (C) but seem to miss the debate between (A) and (B).
Posted by: zlguocius at Sep 5, 2007 1:02:50 AM
This whole business about "time opportunity costs" seems a little bit "economistic" to me. You're assuming that in the difficult multivariable optimisation problem which is your life, you can be certain that time is a factor with a high shadow price, rather than a slack factor. Someone making this kind of argument is implicitly suggesting that every second of their day is taken up with doing something valuable and important, so that the saving of two minutes is a material gain. I think that's very unlikely, and casual empiricism of economists suggests that two minutes saved at the ATM means two minutes wasted doing something else.
This generalises to a larger critique of the kind of economic reasoning that drives Tyler's book; arguments which depend on minimising, maximising or optimising quantities with respect to a completely unknown function. I'd say that over the kind of domain we're talking about here, both monetary opportunity costs and time opportunity costs are very small, the difference between them is also small, and the Bayesian estimate of that difference is flat and centred on zero. Or in other words, it doesn't matter a whit.
Posted by: dsquared at Sep 5, 2007 4:10:53 AM
I wonder what the average age of the "carry more cash" crowd is and the average age of the "who uses cash" crowd is. Just curious. Count me in the "carry more cash" group, although I have a feeling I'm on the younger side (30) of the "carry more cash" group. Especially when driving long distances - I had to make an emergency stop one time, and it was not one of those "super center" exits off the highway, and the cash register at this place looked like it was 80 years old. Needless to say, this guy didn't take credit cards.
One added bonus of carrying more cash: A group of us were out one night and this guy, who was on his first date with one of the women in the group, just tossed his money clip on the table. Now it was probably just a 100 wrapped around some 5s and 10s, but later on I asked another of the women in the group for her take on the guy just dumping his money clip on the table to pay for things and she said, "It never hurts to see someone drop a wad of cash like that". Apparently tossing the gold or platinum or super-duper-titanium credit card doesn't have the same effect.
Posted by: AZ at Sep 5, 2007 8:23:35 AM
I used to carry some $1s for soda at work, or a rare Breakfast. But my wife would always take my cash instead of getting her own cash. So I stopped carrying cash. Since I have stopped working at that place, and work at a place that takes my debit card with no signature for coffee and lunch, so I still dont carry cash. My wife also doesnt ride the bus anymore. So I have $2 in my wallet and the rest of my cash is in a bowl on my dresser.
Posted by: Jacob at Sep 5, 2007 9:28:44 AM
Don't forget the opportunity cost of worrying whether you're being efficient.
Posted by: Jeff Brown at Sep 5, 2007 9:34:36 AM
Wait, has is having cash more time saving then using a credit or debit card. With cash you first have to have it, it's bulky, heavy, a you have to count it percisely. With a debit card or credit card it's swipe and go, it's that simple. Now have you thought about what would happen if your wallet get's stolen or you drop it in water. You may loose every dollar you have in there, which some of you are saying that you carry several hundred dollars on you all the time. That's stupid. If your card get stolen all you have to do is make a phone call and your money is back in your account. For me financial security is more important than the stigma of showing off a wad of dollars.
Posted by: Stephen at Sep 5, 2007 9:45:07 AM
One added bonus of carrying more cash: A group of us were out one night and this guy, who was on his first date with one of the women in the group, just tossed his money clip on the table. Now it was probably just a 100 wrapped around some 5s and 10s, but later on I asked another of the women in the group for her take on the guy just dumping his money clip on the table to pay for things and she said, "It never hurts to see someone drop a wad of cash like that". Apparently tossing the gold or platinum or super-duper-titanium credit card doesn't have the same effect.
Apparently studboy never learned the First Rule of Poon Tang:
If you gotta pay for it, it's not worth it.
Posted by: Peter at Sep 5, 2007 9:57:19 AM
The forgone interest on cash may be trivial, but the rewards from no-fee credit cards are not. They are 1-3%, which can add up to pretty good money over the course of the year. Even as a broke college student who doesn't actually spend very much at all, I've still made about $75 in rewards this year, plus $60 in "New Member" bonuses at amazon.com and buy.com. I imagine that most people spend a lot more money than I do, so that would be even more rewards. Also, credit cards do put a check on my spending and snacking by being less convenient than cash
Also, by having a credit card you pay in full every month, you get the interest on the float between when you charge it and when you pay the card. There is something psychologically satisfying about getting interest on money *I've already spent*, even if it doesn't amount to much. That's a bad economic argument, I suppose, but I like it.
Posted by: Lucas Wiman at Sep 5, 2007 10:27:18 AM
For those of you claiming that cash is faster than plastic ... have you watched a cashier struggle to give you change recently? I'd rather pull my hair out.
After living in Los Angeles for a year -- where I don't think I ever even *saw* cash (probably because everyone is living on credit) -- I stopped carrying cash around. My Wells Fargo debit card gives me rewards points that translate into an extra $25-30 a month in my pocket.
However, this perspective does hinge somewhat on where you live. I withdraw cash when I'm visiting Manhattan for cab fares and such. In Portland (OR) where I live, however, all cabs take all major CCs, and I add tips at the end when I'm buying drinks at the bar, so I have yet to come across a situation where I need cash in hand.
Posted by: Marina at Sep 5, 2007 10:32:54 AM
^ Lols
I was just going to say those who get impressed by wads of cash is probably not the ones you want to get too familiar with
Posted by: Hao at Sep 5, 2007 10:34:58 AM
I carry cash and almost always use plastic.
But there are times when cash saves lots of time. Small purchases (coffee & bagel, a newspaper, a pint) -- if you have a few singles, or maybe a five, you leave the bills on the counter and don't need to wait for change.
Restaurants -- if you have at least a five or ten to go along with the standard 20s, you just round up the tip, leave the bills on the table and walk out the door. I especially want this option when we're eating out with the kids.
Splitting the bill -- always easier with cash.
Riding the bus -- I always want a few singles on me, just in case I forget the ride pass or have used it up.
Posted by: Henry at Sep 5, 2007 10:54:50 AM
Who bothers with ATMs? I go to the grocery store fairly frequently (I tend to shop on the "European" model--get as much of my food as fresh as I can--so if I need casg, I use my debit card at the grocery store and get cash back. No extra trips, no extra cost, and more of my money earns interest.
The flaw in Manikw's analysis is the assumption that one can only get cash at an ATM, to which one must make a special trip.
Posted by: Donald A. Coffin at Sep 5, 2007 11:14:16 AM
Because you all are dying to know (maybe just Peter and Hao), Mr. Wads of Cash left to bring his date home (who turned out to be about 15 years older than I thought she was) and then apparently returned trying to find the one who was impressed by the wads of cash. Mr. Wads of Cash ended up with no cash, no women, and probably an empty gas tank after driving back and forth around the city.
I can't complain though, because in trying to impress the women Mr. Wads of Cash paid for drinks all night long for the whole table, including me. Of course, it didn't matter to me whether or not he used cash or a credit card at that point.
Posted by: AZ at Sep 5, 2007 2:17:07 PM
I always carry a $5,000 bill, in case of an emergency, and a roll of quarters, so I can still play pinball even if the change machine is broken. And I can hold the roll of quarters in my fist when I punch people.
Posted by: Carter at Sep 5, 2007 2:28:04 PM
I vote mostly credit card. Why?
I tend to wear jeans so tight that I can't fit a wallet in the pocket. It is even hard to get cash out, especially coins, if I just stuff it in there. So, I have a credit card holder just big enough for a credit card and an ID.
I guess I'm from a different demographic group than most of the readers of the blog, though, as this wasn't mentioned in the first 50 comments.
Posted by: Arho at Sep 5, 2007 3:20:21 PM
I vote mostly credit card. Why?
I tend to wear jeans so tight that I can't fit a wallet in the pocket. It is even hard to get cash out, especially coins, if I just stuff it in there. So, I have a credit card holder just big enough for a credit card and an ID.
I guess I'm from a different demographic group than most of the readers of the blog, though, as this wasn't mentioned in the first 50 comments.
Posted by: Arho at Sep 5, 2007 3:20:35 PM
Because you all are dying to know (maybe just Peter and Hao), Mr. Wads of Cash left to bring his date home (who turned out to be about 15 years older than I thought she was) and then apparently returned trying to find the one who was impressed by the wads of cash. Mr. Wads of Cash ended up with no cash, no women, and probably an empty gas tank after driving back and forth around the city.
[cue Nelson Muntz voice] HA HA!
Posted by: Peter at Sep 5, 2007 9:17:54 PM
i believe it is not that important to carry cash everywhere with you nowadays. Today virtually everything with banking and finance is on computers and credit cards. I have lost much money carrying my wallet around, and i believe that no one should have the risk of losing their money where ever they go. In a couple years I believe that many peoplle would say the same thing. Everyone is part of a bank, and what bank doesnt lt you have a bank/debit card? I that was not an option then it would be a very sorry bank.
Posted by: blaisehowe at Sep 5, 2007 9:50:46 PM
If the central issue for the person making this decision is time-sensitive (e.g. - ATMs are not in abundance in his/her area, for example), probably the best strategy is to withdraw the maximum sum so as to reduce the # of trips to the ATM but to keep a large chunk at home to minimize the chance that the whole bankroll is lost/pilfered.
I hope I never become so anal about my time that a trip to the ATM is a life-altering event.
Posted by: fustercluck at Sep 5, 2007 11:08:02 PM
You non-cash carriers up there? What about garage sales and Craigslist? For heaven's sake people, don't you have some sort of hobby where the necessary equipment devalues far faster than it wears out or obsolesces?
Perhaps not.
For my part, I tend to take out cash in about $200 wodges, and will deliberately keep myself a little short on cash when I'm trying not to spend much money.
Posted by: Ryan Cousineau at Sep 6, 2007 12:39:48 AM
Well, cash is king. But in the bank, in my opinion.
3 reasons:
Security: If your wallet is stolen, you cancel your credit card, but don´t cancel your money.
Spend: There´s an old saying here in Brasil: "Dinheiro na mão é vendaval" which means, money available is money spent.
Membership Rewards Points: Great way to earn something out of nothing.
Regards,
Gabriel
http://www.donttalkaboutlife.com
Posted by: Gabriel at Sep 6, 2007 9:47:16 AM
I was looking at big screen TVs at Best Buy yesterday. I was wondering - am I more likely to buy this with cash or plastic?
If I had to lay out $2000 in cash I'd never buy a big screen TV, but plastic makes it easier - by a large margin.
I question those that say they spend more with cash than they do with plastic. I wonder if it empirically plays out that way.
Posted by: Shane Milburn at Sep 6, 2007 11:10:50 AM
Cash migrates from my wallet to my wife's purse to someone's cash register. With cards, the transfer rate is slower, and I have a record of what happened.
Posted by: CDeBoe at Sep 6, 2007 11:21:17 AM
I try and carry cash and pay with a credit card.
I have a friend who tried to pay with a card and never carry cash cause he thought h'd spend less, as far as I could tell he didn't save money, he just borrowed it from me constantly. Carry cash = better friend.
Posted by: Brett at Sep 6, 2007 2:42:59 PM
CASH.
I'm not in love with credit card companies. They conspire to put all their customers in debt forever.
I'd rather not let them have 2-3% of every purchase I ever make
Posted by: frank at Sep 6, 2007 11:54:57 PM
I usually carry both a card and like to have a little cash on me. Usually when i make big purchases
it seems like when I use a card I don't see the money gone out of my wallet so i don't feel as bad for spending so much money. But I still like to have a little cash on me so I can buy little things
and it doesn't take all the time to slide a card.
Posted by: Alex at Sep 10, 2007 9:27:05 PM
Personally I try to stay away from credit purchases, the whole interest thing just bothers me. I will use credit as a last resort, or for an emergency, but as long as I have enough in my bank account I will use either a debit card or cash. I usually don't carry large amounts of cash on me, I will carry some small bills for small purchases but mainly I use my debit card, its quick and easy and if it gets stolen all you have to do is cancel the card. If your cash gets stolen you probably wont get it back. With everything considered my personal choice is the debit card. Its safe, its quick, its easy, and there is no interest.
Posted by: John at Sep 10, 2007 9:36:53 PM
I do not like carrying cash because not only does it make my wallet heavy, the more cash i have the more i am willing to spend. The opportunity cost of having cash for me is having a debit card. Having a debit card, it is still my money but not getting interest added and paying more than i have to as does a credit card. Having a card also makes it easier when purchasing because you just swipe the card instead of digging through your wallet trying to find change. The value of paying with cash makes your purchase seem more expensive because you feel as if you are running low on cash as to having money on your card where you don't see the money coming off your hand. So therefore, i choose not to carry a lot of cash but instead a debit card cause i want the value of my dollar to increase.
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