The convenience of credit cards and checks can be seductive. According to a 2010 Associate Press-GfK Poll, however, many Americans pay for that convenience in anxiety: 49 percent of those polled reported spending "some, most" or "all of the time" worrying about their credit card debt. (Ref. 4 pg. 7) While it may seem that buying on credit or using checks is a necessity of modern life, the advantages of using cash go beyond the reduction of stress.
In September 2008, the American Psychological Association published four studies comparing the psychological effects of spending with cash with that of using credit or gift cards. In one of the studies, participants were given a dollar in cash or a dollar-value gift certificate, which they could use to buy candy. The ones with cash were less likely to spend than those with certificates. Science Daily quoted the authors' conclusions: ""The studies suggest that less transparent payment forms tend to be treated like [play] money." That which is perceived as "play money" is easier to part with than the real thing, it seems. (See Ref. 1)
Though interest rates vary, the rates credit card companies charge when you don't pay your minimum balance at the end of the month can be cumbersome. Also, if you find yourself using checks as "play money" and spend more than what you have in your account, you'll be hit with overdraft fees from your bank and could incur even more fees from the retailer that received the bounced check.
Sure, thieves may steal your cash, but if you only carry a certain amount on you at a time, or keep a limited amount in your home, you can make sure the loss is manageable. If a thief steals your credit card or checkbook, an entire account or even your life savings could be in jeopardy. (See Reference 2)
- cash or card image by Pierrette Guertin from Fotolia.com