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12 Things To Avoid Buying With Cash

In a world where digital transactions have become the norm, relying solely on cash for purchases can pose significant risks and drawbacks. While cash offers convenience and anonymity, it often lacks the security, consumer protection, and benefits provided by electronic payment methods. From large investments to everyday expenses, there are specific instances where using cash may not be the best financial strategy. 

In this article, we explore common scenarios where opting for alternative payment methods is not only safer but also more advantageous.

Cars & Vehicles 

Purchasing a car or any vehicle with a large sum of cash is generally inadvisable. It might raise red flags significantly if the purchase price exceeds $10,000. This could lead to unnecessary scrutiny or even legal complications. 

Moreover, using cash doesn’t provide the same level of consumer protection as credit cards or financing options. If there are problems with the vehicle post-purchase, you have limited recourse. 

We recommend that you use safer payment methods like bank transfers, wire transfers, or financing. These options provide a paper trail, protect your assets, and often come with additional benefits like warranties or financing terms.

Real Estate

Buying real estate with cash, while tempting to avoid mortgage interest, is often not the best financial decision. Like purchasing a car, carrying large sums of money for real estate transactions is inherently risky. Furthermore, real estate deals often involve complex legal and financial aspects. Using cash can complicate these processes and make it difficult to track expenses and returns. Additionally, many real estate investments generate taxable income. Having a clear financial record through traditional payment methods can simplify tax filings. Therefore, it’s advisable to use techniques like wire transfers, cashier’s checks, or even traditional mortgages.

Jewelry

Paying for jewelry with cash is a significant security risk. If the jewelry is lost or stolen, recovering the loss is more challenging without proof of purchase. Credit cards often offer purchase protection and fraud safeguards, providing an extra layer of security. Additionally, some high-end jewelry stores offer financing options or layaway plans, which can be more financially manageable. By using credit cards or financing, you also establish a record of the purchase, which can be valuable for insurance claims or resale.

Business Expenses

Businesses have little recourse in case of lost or stolen money. 44% of companies in the US use credit cards to make more than half of their business expenses. Credit cards offer benefits like rewards, purchase protection, and detailed transaction records. These features can help businesses manage cash flow, earn rewards, and simplify tax preparations. Additionally, using credit cards for business expenses can help build business credit, which can be beneficial for future financing needs.

Online Purchases

In 2022, online payment fraud reached losses of $41 million, of which North America accounted for 42%. 

Most online retailers exclusively accept electronic payment methods like credit cards, debit cards, or digital wallets. Attempting to pay with cash would require you to physically deliver the money to the seller, which is inconvenient and risky. Moreover, credit cards provide crucial consumer protection in case of fraudulent charges or disputes. They offer chargeback options, allowing you to recover your money if the product doesn’t arrive or is significantly different from the description. Cash transactions lack these safeguards, leaving you vulnerable to potential losses.

Travel Booking

Most airlines, hotels, and rental car companies prefer electronic payments for efficiency and security. Using a credit card for travel bookings often includes additional benefits like travel insurance, purchase protection, and rewards points. In case of flight cancellations or unexpected expenses, the presence of a credit card acts as a financial safety net. Additionally, credit card transactions create a digital record of your travel plans, which is convenient in case of emergencies or for travel-related insurance claims.

Big-Ticket Electronics & Appliances 

Similar to online purchases, credit cards offer essential consumer protections. Extended warranties, price protection, and fraud prevention are expected benefits. Moreover, if the product malfunctions or arrives damaged, having a credit card transaction provides leverage for dispute resolution. Additionally, many retailers offer financing options for large purchases, allowing you to spread the cost over time. Using cash for such purchases eliminates these benefits and exposes you to financial risks.

Subscriptions 

Paying for subscriptions with cash can take time and effort. Most subscription services prefer automatic electronic payments, whether for streaming, software, or gym memberships. Using a credit card or digital wallet ensures uninterrupted service and simplifies billing. Credit card payments often come with rewards points or cashback, providing additional value. If you’re dissatisfied with a subscription service, canceling a credit card payment is usually easier than canceling a cash-based arrangement.

Utility Bills 

Paying utility bills with cash is inconvenient and often impractical. Most utility companies prefer electronic payments for efficiency and to avoid processing errors. Using a credit card or setting up automatic payments ensures timely bill payments and helps build credit history. Credit card payments also offer rewards or cashback, providing additional value. Paying with cash can lead to late fees and potential service disruptions.

Public Transportation

While some public transportation systems might accept cash, using transit cards or mobile payment options is generally more convenient and efficient. These methods often offer fare discounts, faster boarding times, and the ability to track your spending. Carrying cash for public transportation can be risky and uncomfortable, especially in crowded areas. Additionally, digital payment methods often integrate with fare capping or contactless payment systems, providing additional benefits.

Donations To Charity

While some charities might accept cash donations, using a credit card or electronic payment method is often preferred. Many credit card companies offer donation matching programs, doubling the impact of your donation. Additionally, electronic payments provide a record of your donation for tax purposes. Cash donations might not be eligible for tax deductions, and there’s no guarantee of the charity’s legitimacy without proper documentation.

Investments 

Investing with cash is generally not recommended. Most investment platforms require electronic transfers for security and record-keeping purposes. Using cash for investments can be time-consuming and risky and needs more transparency from electronic transactions. Moreover, investing through reputable financial institutions offers investor protection and access to various investment options. Cash investments might be limited and need more potential for growth and diversification offered by traditional investment platforms.