5 situations where cash can help you save

#ConsumerEducation 

Ahmed is a digital-first person. He relies on digital payments to know not just how much he has spent but what he has bought, and where. In the UAE, he says, the convenience of making digital payments even for small amounts and tips means that he barely carries any cash. Research shows that digital payments are the norm in the UAE, with only 23% cash transactions. 

What are the situations in which digital payments are better and where is cash better?

1. For budgeting: Psychological studies show that people spend up to 100% more when using a card. If you are trying to stick to a budget when you are out shopping, it creates an automatic barrier to shopping for more than you had set out to buy.

   To maximize budgeting with digital payments, make friends with account statements and ensure that you go over them regularly.

2. For tips: Many restaurants, delivery apps, and taxis allow consumers to add a tip while paying digitally. However, many small establishments, kiosks, and outlets still work with tip jars. It’s good to carry cash to be able to tip for good service.

   When making digital payments, ask the server if you can add a tip, and check whether they will receive the whole amount. Several organizations do just that.

3. When traveling: People prefer to pay cash while shopping in unfamiliar locations or eating at new restaurants in foreign countries because of the risk of possible theft or misuse of their card details.

   Make sure you update your transaction limits and put geographical and time-based transaction controls on your card app, if using digital payments while traveling. 

4. Avoiding fees: Some cards have heavy penalties on delayed payments. Some retailers also have minimum purchase rules to cover transaction costs. In some situations, paying cash can protect you from fees.

   Set a reminder to pay card dues in full on time. Consider using your debit card so you only spend what you have, without getting into debt.

5. For emergencies: While digital payments are ubiquitous, easy, and safe, it is always good to keep some cash with you for any emergencies such as power or internet outages.

Also make sure you don’t use your covered card up to its full limit, so that it can be used during emergencies.

Have your say

Where do you prefer to use cash, where do you use digital payments? Join the moneysmart community and share!