Is a Cash-Only Lifestyle Worth the Inconvenience?

A few years ago, on a random day, I decided to close all my credit card accounts. My husband and I had been debt-free for a year and hadn’t been using the cards, but kept the accounts open “just in case.” After proving to ourselves that we could survive without credit cards, we decided to fully embrace a cash-only lifestyle.

In a previous post, I explored the benefits of not using credit cards. Of course, with any decision, there are pros and cons. While there are many, many positives to not using credit cards, it is worth taking a look at the drawbacks as well.

Here are nine inconveniences of a cash-only lifestyle.

1. No 1-800 number on the back of your money to call in the event of loss or theft.

You lose your money, you are out (of luck). I’ve had some close calls where I misplaced some cash (like hundreds of dollars!) but eventually found it. Those moments during which I couldn’t find the money were filled with panic, and my only solace was in thinking that hopefully whoever found the cash needed it more than I did.

Interestingly though, those few close calls were all during the beginning months of living a cash-only lifestyle, so maybe those moments were just due to inexperience with the green stuff.

2. Fraudulent charges on a debit card impact your cash-flow.

One common misconception about debit cards is that you are not protected in the event of fraudulent charges. The truth is, you are protected similarly to a credit card. Your liability both with credit cards and debits cards is $0 if you report the theft or loss before the card is used and $50 if you report it immediately after you see fraudulent cards. The main difference comes if you wait an extended amount of time before reporting the loss or theft of a debit card.

It’s worth taking note, though, that if a fraudulent card does go through, it’s coming out of your bank account until you notice and report it. Fortunately, the banks are vigilantes when it comes to preventing those purchases. In the four years since ditching credit cards, I’ve NEVER had a fraudulent charge go through.

3. Potential holds on your checking account when renting a car or booking a hotel room with a debit card.

Every hotel and car rental company has their own debit card policy, but a common one is to put a temporary hold on your account for the total amount of your hotel stay upon check-in, or in the case of renting a car, usually an additional deposit (in my experience, $50).

In both cases, the holds are released upon check-out or at the end of your rental when the actual charges are put through, and they usually disappear within a few days. These holds, of course, do affect your cash flow, so you need to plan accordingly. Simply knowing what to expect before you travel will limit the inconvenience of using your debit card. Some hotels place their debit card policy on their websites, while a quick call to the ones who don’t will clue you in on what they charge.

4. You will pay surcharges when using a debit card internationally.

Expect to incur foreign transaction fees when using your debit card abroad for purchases or to withdraw local currency from an ATM. This isn’t any different than traveling with a credit card, so this inconvenience is present either way. Some banks (and credit card companies) do not have these fees though, so call before your trip. A simple workaround is to travel with traveler’s checks or cash and to reserve your debit card for emergencies.

5. There is a hassle factor when using cash.

Ever try to split a dinner bill when you’re the only one using cash? How about feeding your dollar bills through the self-checkout register? Sometimes it would be easier and faster just to swipe and go.

6. Frequent trips to the bank.

If you decide to live a cash-only lifestyle, you will get to know your bank’s tellers very well. And they will get to know you.

Yes, using cash means you’re marching off to the bank or ATM more often. However, this doesn’t have to mean (and shouldn’t mean) it’s an almost-daily occurrence. I recommend “touching your money” as infrequently as possible during the month. Plan your bank trips to coincide with payday and withdraw the amount you need to last you until your next planned trip. This works well, especially if you use a zero-based budget.

Also, you can treat your supermarket (or anywhere else you use your debit card) as an ATM if needed. Some retailers have generous cash-back amounts such as Aldi which allows you to withdraw up to $200. This is extremely convenient if your grocery store is closer to you than your bank.

7. No paying for that vacation until you have the money for it.

Want to book your summer vacation or make a large purchase? Well, you actually need to have the money in the bank to do that. There’s no more, “I’ll just put that on the card until I have the money for it.” While this “inconvenience” really means you’re not making purchases you can’t afford, this can thwart your ability to take advantage of time-sensitive deals.

8. People think you’re a little crazy, or at best, weird.

Yes, people will think you’re different, crazy, or weird, for embracing a cash-only lifestyle. To this I say, “So what?” You’ve probably heard the statistic that most Americans live paycheck to paycheck and couldn’t handle a $1000 emergency with cash. I’d say “different” is what we should all be going for.

9. FOMO (Fear of Missing Out)

So there are times, when I ponder, “Am I missing out on free travel and perks?” As soon as that thought enters my head, I remind myself that credit card companies don’t issue cash back and airline miles out of their generosity.

Think about it, rewards and incentives for using your credit cards wouldn’t exist if the credit card companies didn’t benefit from them. They are in the business of making money, and they know that offering 1% (or 2% or 3%) will get you to spend more, without stopping to do the math and recognizing that you have to spend $100,000 to earn $1000. They have studied the psychology behind incentivised spending. They know what they’re doing. It might be tempting to play the rewards game, but in most cases, it’s the credit card companies that win.

Weigh the Pros and Cons

While there are inconveniences with living a cash-only lifestyle, there is also much to gain from going that path. It is up to you to decide if the drawbacks outweigh the positives.

As mentioned in 25 Reasons to Cut Up Your Credit Cards, the best benefit of using cash only is the PEACE that comes along with it. Personally, I will take that—along with these inconveniences—any day!

What downsides have you experienced with a cash-only lifestyle? Are they enough to ditch the cash and stick with credit cards? Let me know in the comments below.