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Plastics or the greenbacks? Why keep the dollars in your wallet?

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By: Phil Bradford
on 20th Apr,2016

Credit cards or dollars! Keeping each has their own pros and cons. Find out the facts on your own.
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The debt burden of the Americans’ is ever increasing. Most of them are diverse in nature. As per Gallup analysis, people in the country are highly indebted.

Economic update

  • The U.S Federal Reserve reports that credit card debt is the single largest form of revolving debt in the country.
  • It stood at $913.6 billion back in July 2015.
  • Around 3.8 percent of the total outstanding revolving debt has increased from July 2014-July 2015.

2010 U.S. Census data has reported the following:

  • 116.7 million households were grappling with insurmountable revolving debt.
  • On an average, a household has about $7,828 revolving debt to wriggle them out.
  • The average adult in the country (aged 18 or more) owed $4,028 revolving debt.

Uneven debt burden - The financial tug-of-war

The enormous American debt burden has been distributed unevenly amongst the masses. As per Gallup’s assessment, almost 39 percent of the general population carry no consumer debt at all, encompassing credit cards (or the plastics), student loans, auto loans and personal loans.

On the contrary, GenXers (those who are in the prime childbearing years) are burdened with the highest amount of outstanding balances in the same four areas, where credit card debt is the highest.

Keeping these facts in mind, it’d be wise of you to strike a balance in your use of the plastics (credit cards) and greenbacks (dollars). Carrying cash in your wallet is beneficial in more ways than one. Some of them are as follows:

Cash and your budget

Did you ever hear of budgeting using an envelope? Even a term has been coined around it, ‘envelope budgeting.’ It refers to the process of segregating monthly income into different envelopes for different purposes like discretionary and non-discretionary costs.

The money on them will signal you to stop spending on each item as soon as the money in a particular envelope has finished. This method is effective in keeping unnecessary expenses in check and will let stick to your budget to the fullest.

However, given the daily hectic schedule, it’d be good if you could use some kind of online free budgeting applications to automate your financial tasks and ease the crease on your forehead.

For example, you could use the free personal budgeting application developed and provided at no cost all by the Debt Consolidation Care Community. To locate that, you could visit this page here.

Credit cards and your inflated lifestyle

Even though it is a digital age, yet a lot of merchants still don’t accept cards (be it credit or any other). Sadly, if you chance upon such a merchant without any cash in your wallet, then you'll have to pay a hefty amount to get liquid money instantly.

How much will it cost you? According to a survey, on an average, you’ll have to shell out near about $5 for an out-of-network ATM use. This amount will pinch you more, if you’re taking out, say a $20 bill.

Besides, you will have to run hither and thither to find an ATM in a remote area. So, the best way out during such situations would be carrying some cash.

A minimum purchase cap on every credit card payment

Merchants are charged a fee for every credit transaction. This could reduce their net profit and so, they pass on the burden to their customers.

Moreover, in 2010, small businesses and retailers joined hands asking the government to allow them to put a minimum purchase requirement on purchases made via credit cards. This provision was later added to the Dodd-Frank Wall Street Reform and Consumer Protection Act.

This amendment to the bill went largely unnoticed. But, carrying cash at all times has become all the more important now, as $1 gum could easily inflate into a $10 purchase.

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