4 reasons to stop using cash and start using credit cards

With the availability of credit and debit cards, online payment systems, peer-to-peer networking, smartphone apps and more, it’s never been easier to ditch cash. And beyond convenience, there are plenty of benefits to sticking to credit cards.

Unlike cash, credit cards give you more consumer protections, perks that reward your spending with free airline flights, hotel rooms and even cash back – plus, they make it easy to track your purchases.

Here are four reasons to stop using cash and start using credit cards:

1. Security

Cash is easy to lose. Whether that wad of $20 bills gets dropped in the street, runs through the wash in your jeans or burns up in a house fire, once it’s gone, it’s gone for good. The U.S. Treasury handles more than $30 million worth of damaged and mutilated currency each year.

“Carrying around a lot of cash just isn’t safe,” says Beverly Harzog, credit card expert and author of “The Debt Escape Plan.”

Credit cards are not only more resilient, they also offer more protection than cash substitutes like debit and prepaid cards and checks, because the money isn’t taken immediately from your account.

“If somebody hacks into that [debit card or checking] account, you can lose everything in that account,” Harzog warns. “Many banks will cover that, but you can be without that money for a week or two. If you live paycheck-to-paycheck, you can get hit with late fees and other problems.”

2. Consumer protection

Once a merchant or online retailer has your cash, your only recourse if you’re dissatisfied is convincing the seller you deserve a refund or exchange, or resorting to lengthy legal complaints. But with credit cards you’ve got plenty of options, notes Robin Saks Frankel, personal finance expert.

Under federal law and the dispute policies of card issuers, credit card companies can reverse a charge if a merchant fails to deliver your order, sends unordered items, delivers damaged merchandise or hits you with unauthorized charges.

Many card issuers go even further, offering purchase protections that include extended warranties and replacement insurance for lost, stolen or damaged purchases. There’s also price protection, which refunds the difference if something you buy goes on sale in 60 to 90 days, and refund protection if you’re unhappy with a purchase.

Other protection perks include getting free credit scores from most major issuers. Also, Discover offers free ID theft protection that monitors your Social Security number and alerts you if anyone tries to open credit accounts in your name.

3. Perks and bonuses

Beyond security, where credit cards really beat cash is with benefits and rewards, from free hotel stays and airline trips to cash back rebates, notes credit expert John Ulzheimer, formerly of FICO and Equifax.

“Rewards are certainly a benefit of using plastic over cash, and there are so many different programs that have no fees. Except in the very rare instances where a retailer will give you a slightly lower price if you use cash, it offers no rewards,” he says.

Other perks may include exclusive offers on entertainment offerings and experiences, hotel room upgrades, concierge services and access to airport lounges, just to name a few.

Flyers using the Delta SkyMiles® Gold American Express Card get one free checked bag on each flight, the Chase Sapphire Reserve card offers trip cancellation and delay insurance, travel accident insurance and lost luggage protection, and your card can even score you free access to TSA PreCheck, Global Entry or Clear, to speed you through security lines.

“As more and more credit cards compete for your dollar, the perks just keep getting better,” says Frankel.

“Rewards are certainly a benefit of using plastic over cash, and there are so many different programs that have no fees. Except in the very rare instances where a retailer will give you a slightly lower price if you use cash, it offers no rewards.”

4. Manage spending

The key to making credit card perks work for you is to avoid carrying a balance. Otherwise, you can end up paying more in interest and get so far into debt that any rewards won’t be worth it.

“If you can control yourself and stick to a budget, you can definitely profit from using rewards cards,” Harzog says. “But you have to… pay the bill on time and in full.”

She suggests checking your accounts at least once a week to make sure you don’t forget about any spending, especially if more than one person is using the account. Other strategies include paying your card accounts two or three times a month, to avoid letting your credit utilization ratio creep up, and using your card issuer’s mobile app to pay each purchase as you go.

If you’re looking to create a budget, cards are also the way to go. Unless you like toting a wallet full of receipts, cash is also difficult to track. With credit cards, however, it’s easy to track exactly where and when each purchase was made.

You can also link credit cards to popular online tools such as Mint and You Need A Budget to track and categorize your spending and build a budget – without the hassle of manually tracking every penny.

Bottom line

In many ways, cash is no longer king. Credit cards offer convenience, security and a whole slew of benefits that make them the smart choice when reaching for your wallet.