Use cash when you can

By: Jerry Nix | Freewavemaker, LLC

Date Published: Friday, October 13, 2023

This may come as a surprise to you:

It surprised me when I first read it and I worked for 42 years in the financial services industry.

Lately, there has been a huge push for consumers to use plastic – or phones – when making transactions that could be made in cash. Now we have the Fed that wants to come out with a “Digital Dollar” that all will be forced to use. The purpose of this article is not to give the digital dollar the bad rap that it needs (i.e., the end of freedom and privacy) but to tell you why you should consider using the good ole American Dollar every chance you get.

I personally like to use my credit cards (as long as I pay them off monthly to forego interest) and stack up those reward points to pay for a nice vacation every 3 to 5 years. However, even I am now having second thoughts about such action.

The American Dollar, regardless of what the economist tries to tell you, for now, is very strong and always has been. This may not be the case if we actually go to a “Digital Dollar.”

Let’s face the fact that you can go into about any store in any country in the world and spend an American Dollar for goods and services. You may not want to depending on the value of their currency at the time. It may be better to convert to their currency and spend that … but in a pinch, the American Dollar can be used in almost every country in the world – even in those countries that want to kill us.

Try spending the Mexican Peso in America. Try spending the Euro in America. Try spending the British Pound or the Vietnamese Dong in America. Believe me … you will first have to convert that currency into the American Dollar to spend it. Other currencies are just not accepted here … but the American Currency is accepted in most places around the world.

What I learned from Facebook of all places:

Why should we pay cash everywhere we can by using banknotes instead of a credit card?

Well, let’s assume that I have a $50.00 bill in my pocket and I decided to take my wife or friend out to a restaurant for dinner. If I pay for the meal with the $50.00 bill, the restaurant owner may use the same $50.00 bill to have the laundry for the store employees cleaned.

The person who owns the Laundry may use the $50.00 bill to get her hair done. The barber or cosmetologist may then use the $50.00 bill to go shopping for groceries. And the grocery store owner may use the $50.00 bill to get the store windows cleaned. The Window washer may then use the $50.00 bill to put gas in his truck – and so on.

After an unlimited number of payments from one person to another guess what? The $50.00 bill is still Fifty Dollars. So, it has fulfilled its purpose for everyone who used it for payment and the bank has been left high and dry.

Now what happens if I go to the restaurant and decide to use a credit card or some other form of digital payment and keep the $50 in my pocket?

Card and bank fees for my payment transactions come to about 3% for the seller of the food I ordered – or about $1.50. If the people down the line (because they did not have the cash to work with) have to use a card or digital form of payment – there will be another $1.50 for each purchase made down that line.

Therefore, after just 30 transactions what will remain of the $50 in purchasing power will be just $5.00. The remaining $45 became the property of the bank thanks to all the digital transactions and fees. Is it any wonder why the Federal Reserve and all the US Banks are pushing for a Digital Dollar? It will make them a ton of money – and take away a ton of our liberties.

My dear old grandpappy used to tell me …

“Son, if the bankers had as much sense as they have dollars … The whole world would be much better off!”

The small businesses, who cannot afford to borrow money with interest rates where they are now, need your help. In addition, this is one way to help ourselves as well. Pull small draws of cash out of your bank at a time and use that instead of a credit card or other form of digital payment.

Put this into perspective:

Imagine what each small retailer is paying per month on the basis of fees at 3% per transaction at the Point-of-Sale machine in their store.

Let’s say they have $100,000 per month in sales and 90% are by card or other forms of digital currency. That’s $90,000 which will have a fee of around 3%. That would equal about $2,700 per month just in fees. Stretch that over a year and we are talking about $32,400 per year going to Mr. Banker.

Folks, $32,400 per year would go a long way in helping the small business owner provide for his family, grow his business, or even fund an adequate retirement for himself.

All I ask is that you at least think about using cash, if you have it, the next time you pull out that credit card or phone to pay for simple small items. You are not going to be able to purchase a large item with a credit card. While the credit card company would love for you to do it … the vendor will refuse.

I recently purchased my wife a new car. The cost was about $45,000. I tried to put this on my American Express Card … which Amex approved. The dealership said, “No Way. We will let you pay up to $10,000 on a credit card but the rest has to be cash or financed.” In other words, they were willing to share $300 with the banker (AMEX) but not $1,350 on this one transaction. They could care less about my “rewards points” on that one transaction – and now I understand why.

Have a great week and remember to “Think before you act.” Don’t go where the currents take you in the little row boat we call life … make some waves and paddle as hard as you possibly can.

Jerry Nix | Freewavemaker, LLC

6 thoughts on “Use cash when you can

  1. Nick Torres

    One thing to consider however is the vast majority of retailers have already “baked in” the credit card fees and other transactional costs (e.g., shipping, handling, cost of goods sold) into thier purchase prices, so using cash actually provides addition revue for the retailer above and beyond the actual cost of sale. If everybody ceased using credit cards I don’t belive retailers, especially large ones, are going to pass back the 2.5% – 4.1% credit card transaction fee (varies by institution) to the consumer, they will just hold prices steady and reap the additional revenue. Additionally, many retailers and restaurants directly charge an additional fee for using a CC (look closely at your next bill) and even charities now default to a “will you please cover the transaction fee” checkmark when you do online donations.

    Finally, there is a risk reward analysis at play here. If you lose your sawbuck (or its stolen) there is no real effective recovery for that loss, even if you take the time to write down the serial numbers. However, lose a CC and you can stop it from being used, and if it is used by someone else then there are protections to get reimbursed. And finally as Jerry mentioned, rewards programs offset the costs of the fees, while not completely, at least to some extent. I know as a former and current small business owner I use rewards cards and shiopping clubs (like Costco and Sam’s club) to reduce expenses.

    In many ways that Facebook post reminds me of the guy that kept all his cash in dollar bills in his mattress. He never made and interest, that interest never compounded, and inflation ate away at those dollars like a cancer. But, he had piece of mind that the bank wasn’t making any money off of “his” money so I guess he got that.

    Unfortunately you can’t spend piece of mind, well, not the way you can a dollar, either on paper or plastic. 😎

    Just my opinion, feel free to disagree, all other opinins acknowledged and are valid even if different than mine.

    1. Nick thank you. You bring up some very good points. Some of them I wanted to put into my blog … but I was trying to get the point across about how valuable our dollar is and how less valuable it will become worldwide if we, if fact, go to strictly digital currency. Your old enough to know what happened when Nixon took the “gold standard” of the international dollars in the late 60s early 70s. The value was discounted immensely with our trading partners at the time. I, too, use credit cards (no debit though). But I also pay them when they come due. Keep responding with the good points …. I do not mind at all.


  2. Nick Torres

    Just a quick follow-up. In all fairness and transparency, and to Jerry’s point about the strength of the dollar, and in conflict with my own personal statement before, I do keep a reserve of good ole’ American cash, about a couole of grand, in a safe, along with my passport, just in case I gotta ditty outta here in some extreme situation. Like Jerry said, the buck is accepted everywhere so in extreme circumstances I’m willing to accept the risk of holding on to a bit of hard currency 😎.

    Take care all,
    Nick “eL Gato” Torres

    1. Nick … only a couple thousand. I have much more than that at home. I figure in tight squeeze a couple thousand would not last very long. However, I know what you’re thinking … in a tight squeeze there won’t be anything to purchase … so why have any cash. A stash of un-opened cigarettes my be a lot better. People smoke more when there is trouble (even the non-smokers today) and a smoker will give up his wife and children for one more smoke. Not to mention … as long as you leave the cellophane on the pack … they have a great shelf life (LOL)!!!


      1. Nick Torres

        Good point. And if Armageddon ever comes I’ll take lead over gold any day of the week 😎

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