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Which is Better...Cash, or Plastic?

Posted by News2News • 10/01/08 • Subscribe to this Discussion [RSS] • Report This Topic
Topics: banking, Current Events, economics, finance, Opinion, survey

Which is Better...Cash, or Plastic?

Getting Back to a Cash Based System

Recently, before JP Morgan had stepped in and purchased Washington Mutual, but just after AIG had failed; I had suffered from an acute case of panic. It started from a discussion in my business class to which one of my fellow students had asked "What's Going on with Washington Mutual?" I was shocked instantly out of my oblivion. I had no Idea my bank was in trouble. When I got home that night I did some research on the web and learned that, in fact, my bank was on the brink of failure. I had direct deposit of my wages going to the bank; and when I rushed into the human resource department the next day to hurriedly have this transaction cancelled, I was met with laughs. I went home and told my family I was removing all our money from the bank because the bank was about to fail. Being that I am the financier, they all trusted me and agreed. It wasn't so much that I worried I would lose my money, because I do know it is insured, but rather I worried that since Washington Mutual bank was so huge; I may be stuck with the horrible inconvineince of having to wait months to get the money back from the government.
I had forgotten what it was like to operate under an entirely cash based system. Now instead of going online to pay bills I must arrange to get money orders and cashiers checks. And what to do with all this cash? Put in a safe? Carry it on my person? What if there is a robber, or a fire? Heck, who would have remembered that there are actual drawbacks to having alot of cash on hand! I honestly do not prefer this system, but right now I still don't trust the banks. Which is better, cash or plastic?

User Comments

10/01/08

News2News

I think plastic is better. More convienient

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1. 10/02/08
  
  LGramlich
  
  Um...Have you seen the news lately? Clearly, if you don't have it, you shouldn't be spending it.
10/01/08

earthlingorgeous

Nope. Cash is better.

When you use plastic you will pay interest for it. Pay for what you don't really spend.

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1. 10/02/08
  
  wigwam2theorem
  
  Many people pay off their balances in full every month. If you are one of these people, then plastic is good. Otherwise, stick with cash.
10/01/08

HelloAnnie

In some southeast asian countries, cash works better because the banking infrastructure is not quite advanced as in developed nations.

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10/01/08

kat822

I'm living cash on the barrel head, it's not as bad as ya thing

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10/01/08

hadrian1407

cash is better nowadays...Dont trust banks right now...

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10/01/08

RecycleCindy

Cash is best. Better not to charge on plastic...

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10/01/08

annaswan

I vote for cash as well. No interest with cash, no fear of overdraft charges with cash, and no way to spend more than you have - because when it's gone, it's gone.

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10/02/08

Profitimo

i would say cash is better but not convenient.

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10/02/08

drjay1966

The Beatles sang "money can't buy me love" but they didn't say anything about plastic....

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10/02/08

calais50

I don't have a debit card and I only have one credit card. I only use it to buy stuff online.

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10/02/08

roentarre

Plastic saves you carrying so much cash around.

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10/02/08

jadedconformist

Call me optimistic, and irrational, but JPMorgan bought all of the deposits, so you're good. dealbook.blogs.nytimes.com/2008/09/25/washington-mutual-to-sell-deposits-fi...

I mean, you're the financier here, but you're mainly in trouble with your investments in WaMu - not so much deposits in your bank account there. Those are insured up to 100K by the FDIC, and set to go up to 250K. (So yeah, if you're 'big-ballin' over 100K in a single account, you may want to take out the overage.)

Want to know why WaMu failed in the first place? Simply because people were freaking out and withdrawing money:

www.marketwatch.com/news/story/withdrawals-customers-ultimately-sank-wamu/s...{7F09D20B-7B91-48F1-98D6-E92F47C73FA7}&dist=hpts

Edit: Tiny url for the parsed link above: tiny.cc/iUMjF

I personally carry my debit with me (they say you're actually safer using your credit than debit in cases of fraud, because the card companies will fight to get their money back much harder than the banks will for your money. Of course this is best if you are disciplined enough to pay off the balance each month.) I still stand by debit though...I wouldn't feel comfortable hauling my PHAT paycheck around with me everywhere. (riiight.)

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1. 10/02/08
  
  bradhart
  
  if you have more than a 100k in a single bank account then you are just plain stupid and deserve to lose it should the bank fail.
2. 10/02/08
  
  News2News
  
  yes, as I did say in the article above my concern was that with so many customers, had the bank failed it may take the government a while to return all the insured monies to the depositors. One newscaster had said it can take up to six months to get it back from the government. I coulnd't afford to wait that long
3. 10/02/08
  
  bradhart
  
  spread it around in several banks keeping huge amounts of cash on hand is anything but a good idea. If something happens to the cash it is gone, there is no government reimbursement.
10/02/08

blogonsmog

The main problem with credit isn't one's own discipline to pay off debts every month but getting married and finding out that one's mate is totally clueless when it comes to money management, maxing out credit cards then applying for more....

The best solution is to not allow the option of credit because only a fraction of the population can handle it.

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1. 10/02/08
  
  bradhart
  
  If you don't look at the way a potential partner spends, saves and conducts themselves financially you have nothing to complain about. It is pathetic to say oh I'm in love and that is good enough. It is reckless, careless, and an obvious lack of maturity. Prenups exist for a should be required for every marriage...
10/02/08

kdawg68

cash - live within your means and don't overextend. We're paying for "convenience" spending/lending now.

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10/02/08

bradhart

Hoarding cash is about as stupid as keeping more than the insured limit in an account. Should your bank look like it might fail move the money to a different bank, it is that easy.

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1. 10/02/08
  
  blogonsmog
  
  "Should your bank look like it might fail move the money to a different bank, it is that easy."
  
  You are kidding right? If your bank looks like it might fail then it is too late, you've lost your money.
2. 10/02/08
  
  bradhart
  
  Not if you pay attention. If they are putting up a sign on your building you obviously have had your head in the sand for months. It isn't my fault if you don't pay any attention to the people you do business with.
3. 10/02/08
  
  blogonsmog
  
  You have got your head in the clouds. You will be waiting 40 hours in line along with the other people trying to get their money out. There are generally no warning signs. Banks don't want to have a run on them so they don't give out any advance notice. They will withold negative info until they are about to close their doors. That is why you are seeing institutions falling over like dominoes right now. Get it?
4. 10/02/08
  
  bradhart
  
  I get that you are a panic stricken it idiot and a fear monger, but I'll just leave it at that.
5. 10/02/08
  
  xmarks
  
  You don't even have to pay attention as long as your bank is FDIC insured. You will get your money.
10/02/08

faithsju243

Of course cash is better.....but I'm not sure you made the right decision pulling all of your money out of the bank unless if was over the secure FDIC amount. I'm not sure that your bank account per se would have been affected with the "fall" of the bank.

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10/02/08

cranelegs

cash. it burns better and the smoke isn't as toxic.

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10/02/08

kdawg68

Oh, I didn't read the "pull the money out of the bank" part - thougth this was just about cash vs credit card purchases (that's what I get for skim reading).

Pulling money out of banks is sort of insane to me. For one, you are FDIC insured. Two, it compounds the problem - as the more people run on banks the more they fail. Three, you'll never keep pace with inflation if you keep cash in a pillow or under the bed.

Just my take.

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10/02/08

TOMDDiary

Cash is better and safer in this economy. Keep it in the bank and write checks. Use a debit card for your everyday purchases. Cut the plastic and get real about our situation. We have had a great run over the last 20+ years with credit. Now we need to get a real sense of reality.

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10/02/08

PlainOleMike

Plastic is better, because you can't make a ziptop bag out of cash that will keep my sandwich fresh all day.

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1. 10/02/08
  
  cranelegs
  
  yeah, but paper still cooks better!
10/02/08

poisonapplesauce

I use prepaid plastic. My boys are always getting into my purse and losing debit cards and I refuse to get real credit cards, so I have a bunch of prepaid credit cards to avoid interest, and not have to deal with another episode of my 3 year old ripping a hundred dollar bill into peices and saying "look mommy I made more monies". I also do not use debit cards, again because I always lose them. This way I have a bunch of insured little cards all over the house.so if i lose one, no biggie I can still order food and find it later

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10/02/08

xmarks

Keep enough cash for small daily purchases and keep the rest in FDIC bank accounts. The worst thing to do right now is panic. If you are really worried and even just have a few thousand dollars, get a second account at another bank. That way if one goes under, you have access to the other one while FDIC money comes in.

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10/02/08

josephgelb

having money in assets. cash and plastic are good for food and day to day but without money in somenting(s) significant just spending money is pointless

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