8 Things You Can’t Do With Cash

Despite their bad rap, credit cards can do a lot for us.

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For many of us, using some form of plastic has become so common that using cash seems almost inconvenient. Where a credit card at one time was a luxury and writing a check was the everyday alternative to cash, today plastic is far more common a payment method than either cash or checks. According to a Nilson Report, card payments today already exceed paper payments, and the gap will widen by 2015.

One of the results of this shift from paper to plastic is that there are numerous things you can’t do with cash. Here are eight of them.

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Watch a Movie: If you’ve signed up for Netflix, you know that a credit card is required. In fact, Netflix won’t even accept debit cards or prepaid cards. And don’t even think about trying to send Netflix a check. A credit card on file serves as collateral in the event that members fail to return the DVDs they’ve check out. With services like DirecTV and DISH Network, you can use a prepaid card or even pay by check, but the cost of the service typically goes up significantly.

Place An Order Online: It’s no secret that you have to have a credit or debit card to place most online orders. The only exception is if the online company accepts mail orders. In that case you still have to pay with a check or money order as cash is never accepted. With some online retailers, like Amazon, you can pay for items through an online transfer from your checking account, but that’s about as close to paying with cash as you can get when shopping online.

Pay At The Pump: This is an obvious one, but if you like the convenience of paying at the pump, you have to use a card. And if you use a prepaid card, you may want to think twice about paying at the pump. Because your card is authorized before the amount of your purchase is known, a hold will be placed on your prepaid card for $75. Even if you buy less gas than that, the hold can remain on your card for several days, tying up your money until the funds are released. If you don’t want a hold placed on your money, or if you don’t have $75 on the prepaid card, you best option is to pay inside.

Reserve A Rental Car: If there are rental car companies out there that still allow you to rent a car with cash, they don’t make it easy. The first challenge is finding a company that doesn’t call for a credit or debit card. And from there you can expect to be required to make a large deposit. In addition to the deposit, there are rental car companies that also impose other requirements, such as a prequalification process weeks in advance of the rental and additional documentation. If you need to rent a U-Haul, you absolutely have to have a card; they won’t even consider taking cash.

Earn Rewards: Earning rewards has become so popular that now you can earn rewards with just about every type of card: credit cards, prepaid cards, and debit cards. From points to cash back to free travel, rewards have become big business for the credit card industry. Many cards now pay significant cash, points, or miles bonuses for new card members, and some of the best cash back cards now pay as much as 5 percent cash back on some purchases. If you pay with cash, however, your reward will be peace of mind that you aren’t accumulating credit card debt.

Build Credit: A significant benefit of using credit cards is that you are simultaneously building your credit. Of course, that assumes you aren’t exceeding the credit limit of the card and are paying your bill on time each month. But you can’t build credit with cash, even if you are excellent with managing your money. And having a solid credit history is one of the most important ways to improve your finances. A good credit score will not only lower your interest on loans, but it can reduce the price you pay on everything from car insurance to cable.

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Automate Your Finances: Today there are many online and computer programs available to help manage personal finances. From budgeting tools to online investing and money management options, it has become much easier to track your finances. And one of the key benefits of these tools is that bank and credit card transactions can be automatically uploaded and categorized. But if you use cash and you want to track your spending, you will have to manually record every dime you spend.

Lose It and Get Reimbursed: Have you ever heard the saying, “treat it like cash”? If not, it means be careful with it because if you lose it you’re out of luck. But if you lose a credit card, your risk of loss is minimal. Of course, the first step if you do lose your card is to notify the credit card issuer immediately. And if your card gets stolen and there are unauthorized charges, federal law limits your loss to $50. And with credit cards, you won’t end up paying a dime.

DR is the founder of the popular personal finance blog, the Dough Roller and credit card review site, Credit Card Offers IQ.