10 Situations Where Cash Beats Credit
Credit and debit cards have their place in a frugal consumer's wallet. But paying with plastic is not always the best way to go. In some circumstances, cash is the better option.
Some local businesses offer a discount if you pay with cash. Merchants pay fees in the 3 percent range on credit card purchases, and using cash reduces those fees to zero. Many store owners are willing to share the savings when you use cash instead of credit.
Using a debit card for small purchases may seem the same as using cash, but debit cards carry extra risks. If a thief gets hold of your debit card, your checking account can be emptied in a hurry. Avoid the risks associated with carrying a debit card by paying with cash instead.
Expert travelers have favored cash over traveler's checks for years now. In general, smaller businesses and restaurants abroad prefer cash. Travel guru Rick Steves suggests converting cash to foreign currency before embarking on a journey. Bring a credit card but use it sparingly. There are drawbacks to carrying cash, such as vulnerability to theft, but if you're cautious this shouldn't be much of an issue.
Tipping in cash is considerate because it provides an immediate payment, whereas the server may not receive a tip left on a credit card right away. Some restaurants also make servers cover the credit card service fee, so a tip in cash is much preferred.
If you find yourself in a shady diner or gas station (unfortunately these do exist) using cash is the way to go. Even the best merchants may hire questionable employees from time to time, and using a credit card can provide an opportunity for theft.