What Are the Advantages and Disadvantages of Using Cash?

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Making transactions with cash can foster good spending habits, reduce targeted marketing, and alleviate the risk of identity theft, but cash-based transactions may be harder to track, and some merchants only accept credit or debit cards. As with other aspects of finance, carrying cash and using it for transactions has its share of benefits and drawbacks. It can help to reduce consumer spending, but it leaves carriers vulnerable to robbery and is more difficult to track on personal bank accounts.

With the swipe of a credit card, retailers gain access to personal information such as address, spending habits and email accounts, which enables them to track and target consumers for future sales. Making cash transactions, however, allows consumers to erase that digital footprint. Despite these benefits, using cash carries some risk too. Cash expenditures may be more difficult to track; they do not immediately appear on account statements and require keeping track of paper receipts for accurate and real-time tracking. While credit-card carriers are subject to electronic theft, those who carry cash are at risk of theft from purse-snatchers and robbers. Lastly, some merchants, especially hotels and car rental agencies, only accept credit cards, leaving cash carriers out of luck.