Debit Cards Vs. Cash

Published on Nov 11, 2013 05:47 am

Both debit cards and cash provide the ability to pay for a transaction without borrowing money. Whether you prefer to use debit cards or cash is largely a personal budgeting decision. However, there are various costs and benefits to consider when choosing the best payment method for you.

ConvenienceBoth debit cards and cash are convenient. However, debit cards can be easier to carry than large amounts of cash, and you don’t have to make a special trip to the bank to get your money. As with a credit card, you can simply hand over your debit card and spend the exact amount you need to, up to the amount of your available funds.

FeesWhen it comes to fees, cash generally has the advantage over a debit card. Banks sometimes charge merchants a “swipe fee” of a few cents per dollar every time a debit card is used, and this cost is sometimes passed along to the customer. Some cards also charge an annual or a user fee merely to have the card, and you’ll usually face a charge if you overdraw your bank account while using a debit card. Cash carries no such transaction or user fees. However, you may have to pay a fee to get your money out of an ATM, particularly if it’s not connected to your personal bank.

SafetyBoth cash and debit cards have their own safety issues. If you misplace your cash, or if it’s stolen, you’ll likely never see that money again.  However, the risk of loss when it comes to cash is limited to the amount that you carry. If someone gets hold of your debit card, they might be able to clean out your entire bank account. Debit cards do have federal protections that can limit the ultimate amount of your loss, depending on the time frame in which you report the theft. If you do think you’re the victim of theft, there are steps you can take to help resolve the loss.

BonusesSome debit cards come with rewards programs, in which you earn certain bonuses based on your card usage. For example, your bank might pay you one percent of your total transactions back in cash as a perk of using the card. Other debit cards might earn in-house rewards benefits at the bank itself, such as discounted checking fees. A bank won’t generally reward you for paying with cash, but you might get something from a retailer. For example, some gas stations offer customers a discount if they pay with cash rather than with a card.

About the Author
John Csiszar began writing in 1989 and his work appears in various online publications, including The Huffington Post. Csiszar earned a B.A. in English from UCLA and served 18 years as an investment adviser and certified financial planner.

This article is provided for general guidance and information. It is not intended as, nor should it be construed to be, legal, financial or other professional advice. Please consult with your attorney or financial advisor to discuss any legal or financial issues involved with credit decisions.

Published by permission from, Inc.  © 2013, Inc.  All rights reserved.

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