This is for Americans as I know many other countries have heavy debit card use with little cash use.
A friend recently told me she was beating herself up for using her debit card instead of cash as she's trying to keep to a stricter budget. She couldn't tell me exactly why she thought using cash was better than a debit card. This is for in store purchases/paying for gas at the pump (for non-Americans, we mostly have to pre-pay before pumping). She had no concerns about security, etc. Also no concerns about the card usage fees some businesses charge. I pointed out using cash instead of debit card is less convenient, especially since she now has to go inside at the gas station and wait in line to pay. Very inconvenient when she's got her little kids with her as they have to go inside with her (she acknowledges this is a big pain). She doesn't think she spends more with debit card, just that it's bad vs cash.
Keeping track of purchases with cash means you have to keep your receipts. With debit card, you just check your bank account on app/online.
I don't understand this demonization of debit cards. I've seen this attitude elsewhere and it just confuses me. This attitude does not include concerns about debit card security, etc.
Americans: do you consider debit card use the equivalent of cash?
byu/Physical-Incident553 inFrugal
Posted by Physical-Incident553
31 Comments
I use my credit card as cash. don’t spend what I cant pay off
Maybe just the physical cash leaving your hands vs. invisible numbers.
You’re right, it’s not functionally different. Maybe she’s hoping the psychological difference will do the hard work for her?
Because you’re physically seeing your budget in front of you instead of an account that you don’t have to check after every single purchase
I used credit cards as cash—it offers far more security than a debit card, plus I get decent cashback since I’m a heavy Apple Pay user.
I have a lot of family and friends who use debit cards as their “cash” card, but I try to explain to them to use a credit card the same way and just pay off the full balance at the end of the month, since the amount still gets deducted either way. They really have a hard time grasping the concept.
Let’s say after expenses like rent/mortgage, utilities, groceries, etc. you set aside about $100 a week for everything else. Whether it’s fast food, drinks, new shirt, whatever. It’s a lot easier to track that $100 with physical bills as opposed to remembering “I spent about $30 on drinks last night, I have $70-ish leftover and I want to buy a shirt and some fast food.”
I think banks charge vendors for using tap to pay, so that increases overall prices. Otherwise it’s just the decreases pain of paying psychology.
I only use my debit card at ATMs to reduce the chance of fraud. Credit card everywhere else because I prefer Visa or whoever to have to cover the fraudulent charges until they get reversed.
I pay it off in full roughly every week (up to two month lag in cash flow bothers me) so it is essentially cash. Actual cash is a pain, I only use it in situations that are cash-only.
I could understand preferring cash to card (any type) for budgeting purposes; seeing this month’s stack of 20s dwindle to zero sooner than planned could help with discipline.
Counting out the cash makes some more thoughtful about what they’re spending it on. My dad is like that. For me though, cash feels like free money (I generally only get it in like birthday cards) so I spend it pretty carelessly
I see mine as cash. I was low income for a long time, but I was also very bad about losing cash. So I’d use my bank card and write down every single transaction, and check my account on the computer every day. I did not want to get embarrassed at the register or get home and wonder why I was getting that “low balance” text. I still write it down, cause the app is always a few minutes behind.
I don’t ever use my debit card for purchases. I just use my credit cards and pay them in full each month so I get cash back from them and plus they have better protection.
I often use cash too. I don’t carry debit card with me, nor have I saved it in my phone/watch. It’s impossible to spend money I don’t have on me. I use ATM once a week to withdraw my weekly grocery budget in cash, and keep the debit card at home. I have problems sticking with my budget if I just alwayw have my money on hand
Absolutely nothing to it other than bad budgeting
My guess is she is following a personal finance strategy where she has a set amount of money, in cash, budgeted for X category like groceries or whatever, and using the physical limit of how much cash she had as a forcing mechanism to stay within budget. There are personal finance influencers who advocate for this strategy, and it probably works for some people.
For me, I use my credit card as cash so I can get cash back rewards, and pay it off every month. I see no meaningful financial difference between debit card and cash use. I suppose some smaller stores might charge a ‘card fee’ without differentiating between credit or debit, but that is the only thing I can think of.
For some people it helps with budgeting to pull out a fixed amount of cash every week or whatever and that is the money you allow yourself for discretionary spending.
There are many many many many many people who don’t know the difference between credit and debit cards. Could that be what’s going on here?
Yes.
Actually nowadays when I do have a little leeway in my spending, am still bad about losing cash, and still don’t want to embarrass myself, I have two debit cards. One is for bullshit and is always in my bag. One is for groceries and gas.
I think it’s because using physical cash there is friction your brain registers it as this is money leaving my hand. When you swipe a card there is less friction and thought about the money you spent. Yes you could check your bank account and see, but it’s not quite the same.
There have also been tons of studies on how people who spend on a card (debit or credit) tend to spend more money per purchase than those who use physical cash.
I’m 99% debit card but until I put myself on a budget and simplified my life a lot I was definitely leaking $$$ via swiping. I think paying in cash leads you to be more mindful, you see “real money” changing hands.
Things that changed it around for me:
-simplified life with less activities & expenses
-auto transferring some $ from every paycheck to savibgs
-having a budget for things. Groceries & fun, particularly, so I can tell when I’m overspending
-setting up my banking app so I get a notification with every deduction. Is it annoying? Yes! Do I know how much I’m spending where & when and what’s in my account at all times? Yes!
Before that I was just spending like crazy and having a great time…until I ran out of money!
I definitely did- once upon a time. But way too much fraud and skimming now. I have a rewards credit card that I use for everything, and then pay it off each month. It’s a lot harder to steal from and tap and pay makes it even more difficult.
Yes, it is the same as cash. However, there are some people who use cash as a budgeting tool for example example of the stupid envelope idea where you put so much cash in different envelopes each month for different categories to help you keep track of you’re spending so that on a budget of category than you are planning to. Once the cash in the envelope runs out, you no longer make any purchases in that category until the next month hits.
Since debit cards are essentially the same as cash, the only reason I can see looking at it as different is because it would require constant monitoring of your bank account to make sure you don’t accidentally spend more on something than you think you will in a month.
Depends!
Functionally debit card just means it’s hard money not a balance carried.
Psychologically there are *many* studies as well as just anecdotal evidence/experience that for many people exchanging physical cash feels concrete and quite different than using a card. It’s even used against consumers and remains true in non-legal-tender situations like arcades: a customer is more likely to feel pressured to spend more and spend faster when using a points card in machines then when using cash, coins, or physical tokens in machines.
It’s also why there are common budget tricks like what your friend sounds like she’s using: if you have exactly $50 in cash, you simply no longer have the option to make impulse purchases beyond $50, if you have a card you can say you want to spend no more than $50 but still charge more in the heat of the moment.
I don’t use debit cards at all– ever –because in the US they are less secure than credit cards. We run probably 99% of all our expenditures through credit cards in any case, because that generates at least $2,000 every year in rebates. Debit cards give us nothing.
I keep $20 in my wallet in cash but it will often sit there for a month or longer.
In a general sense, I think of them as being the same. However, there is a popular budgeting technique in the US called the cash envelope method. The idea is that because you withdraw the amount of cash you’re allowed to spend. You literally can’t overspend if you only spend that cash. So for somebody that’s trying to budget that way using the debit card kind of ruins the whole approach.
I don’t recommend using a debit card because you don’t have any layers of protection between your bank account and fraudsters.
If someone steals my credit card info, I can do a chargeback, submit a complaint, freeze the card and use a different one, and most importantly, I’ll have a whole month to sort that out before the bill is even due. And then I can refuse to pay the bill if I haven’t sorted it out yet.
If someone steals my debit card info, they can drain my bank account instantly and my whole life is pretty fucked. That’s where my mortgage gets paid, my car note, that’s where my direct deposit goes… like fucking with my checking account will be a giant nightmare with instant consequences. And the whole time I’m trying to fight it and figure it out, there’s no money in my bank account to pay my most important bills.
I like using a rewards credit card because we use the airline miles a few times per year but honestly the most serious reason I don’t use a debit card is because of the risks of fraud.
Editing to add: to address your initial question, I would 1,000% rather use cash than a debit card. It’s not the same to me at all because of the risk of account info being mishandled. Cash is anonymous, no risk of data breaches, and in the US it’s common to get a cash discount too or avoid a credit card processing fee. I avoid using my debit card at all costs.
It’s just for some ppl cash is an easier way to budget because it’s physical. They see debit card as a different bucket than cash and they dont’ want to pull from because it throws off their budget.
I don’t see it like that but it’s helpful for some ppl to think like this to help them budget.
It’s easier to make impluse purchases with a card compared to cash. It you leave the house 50 bucks you can’t spend more then 50. If you leave the house with your card you can empty your bank account in an afternoon with a little trying
The cash in hand people are trying to trick their brain into spending less. It is a valid way to break the habit of buying unncessary items to the detriment of their needs. It is so well advertised to the point that peope don’t understand its original usage.
If your spending is well controlled so that you meet your expenses and savings goals, then the cash only trick is not needed.
actually studies shows that you spend less when you physically show the money.
also it’s easier to retrain yourself and see how much is left in your wallet on what you were supposed to spend (this week or whatever)
checking your account when the money is already spent is not really helpful.
I do pay almost everything cash for that reason!
Withdrawing cash leaves you a preset budget that’s harder to break, and you have to make a more conscious decision to hand over the cash and you physically have to count each dollar and hand it over. It’s a common method to save money, there’s a reason tap to pay is encouraged by business.
Using cash gets pushed a lot as a budgeting tool so much that it sounds like, for her at least, she’s just demonized debit cards which to me is odd.
Its a very instant feedback system, you take money out of your wallet, you instantly see the difference in your remaining balance and then adjust your idea of how much money you have left. Its good for people who nickel and dime their paycheck away then look at their balance and wonder where it went cause no single purchase was over $10.
However financial advice is recycled, a lot, for content and friends helping friends so its kinda like a copy of a copy of a copy, and your friends mindset sounds like the end result of that, like imagine of she tried helping someone, what she’d say, and what that friend would say to the next person about how she handles cash vs debit