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Credit vs. Cash: 5 Ways That Credit Cards Can Be Safer

Contrary to their bad rap, credit cards can be helpful — and safer than cash — when used right.

Author Justin Cupler
Contributing Writer at Tally
March 4, 2021

Credit cards are terrible, awful, horrible things, right? Contrary to some peoples’ beliefs, they aren’t. The real issue is carrying credit card debt — not the credit cards in general. 

In the credit vs. cash argument, credit cards can actually be quite helpful in a wide range of situations. In some cases, they can even be the safer option when compared to cash.

Below, we’ll look at the five ways credit cards are safer than cash and the four reasons it makes sense to drop cash and switch to plastic.  

Credit vs. Cash: How Credit Cards Are Safer Than Cash

While credit cards tend to get a bad rap because they’re often the source of financial problems, there are some ways they’re safer than cash. 

Here are five ways using plastic is safer than greenbacks. 

1. Lost Cash Is Gone Forever

No matter how many times you write “If found, please return to …” on your cash, once you lose it, it’s generally gone forever. Whoever found your lost cash is now that much richer, and you’re kicking yourself for losing those precious bills. 

A lost credit card, on the other hand, is relatively easy to rectify. Immediately call your credit card company to have the card shut down and request a replacement card. In the meantime, monitor your account and dispute any unfamiliar charges.   

2. Strong Fraud Protection

If someone manages to get your wallet and snag the cash, they’re free to use it as they please. However, the Fair Credit Billing Act limits your liability for any fraudulent credit card purchases up to $50. And most credit card companies won’t bother even charging you the $50 minimum

But doesn’t your debit card have the same protections? Yes and no. 

Yes, if your debit card is lost or stolen, and you alert the bank before any fraudulent charge, you won’t be responsible for fraudulent purchases made after notifying the bank. 

However, if there are fraudulent purchases before you’ve notified the bank, your liability could be up to $50 for the first two business days after learning of the loss or theft. After two business days, your liability for fraudulent use is up to $500. After 60 days, you may be on the hook for any fraudulent charges

So, even compared to a debit card, a credit card is safer. 

3. No Immediate Impact on Cash Flow

If someone swipes your cash or debit card and uses it to make purchases, you immediately lose that cash. With the debit card, you may be able to claim fraud and get the money back, but you generally have to wait for the bank to complete its investigation before it credits the cash to your account. This delay can result in overdraft charges and other fees. 

As for a credit card, you won’t immediately lose that money, as it won’t come due until the billing cycle ends. This will give you up to about a month to sort out the fraudulent purchase with the credit card company. And even if it’s at the end of the billing cycle, you can leave the fraudulent portion unpaid, so long as you pay off the remaining balance. 

4. Online Transaction History

Credit cards also offer the convenience of keeping an online transaction history that shows all your credit card transactions over a specified period. This allows you to keep a close eye on where you spent money and how much you spent, plus you can identify and dispute any unfamiliar transactions. While debit cards also offer this convenience, the impact of fraudulent activity on the account would be more immediate. 

Using cash offers no such convenience. Your only running tally is to count what’s left in your wallet and to hang onto stacks of receipts. 

5. Cleaner Way to Pay

Credit vs. cash: A woman wearing rubber gloves washes a $100 bill

Money is dirty … really dirty. Cash has a host of terrible things on it, including trace amounts of cocaine, fecal matter, pathogens, viruses and bacteria. What’s worse, these germs and viruses can live on cash for up to 14 days. And while this may be true, it’s not a reason to worry if you do carry cash. Even though the small-scale study found “viable microbes on paper currency,” it also found that there was no specific source of the germs or absolute proof that the germs could cause infections if passed from one person to another. 

When using a credit card, there’s no worry of receiving contaminated bills as change, and most credit card transactions no longer require the cashier to touch the card. Also, with touchless pay systems becoming more popular, you can pay for your purchase without touching the credit card reader. 

With the COVID-19 pandemic still raging on, there’s no better time to change to a cleaner payment method than now. 

Other Reasons to Switch to Credit Cards

While safety may be a compelling reason to switch from paying cash to using credit cards, there are other financial benefits to switching from cash transactions to plastic. 

1. Credit Card Rewards

Many of today’s credit cards offer some sort of rewards program, whether it’s a points system you can redeem later or straight cash back. When you switch to using a rewards credit card for everyday purchases, these small perks can really add up. 

For example, if you have a rewards credit card offering 5% cash back at grocery stores and spend $500 per month on groceries, you could earn $25 per month just for doing the shopping you’re already planning to do. 

But what about interest rates? The trick is to pay the credit card bill in full within the interest grace period, the time between the statement closing date and the due date. As long as you pay it off like this, you’ll pay no interest but still earn the rewards. 

We’re talking about free money here — it’s a win-win. 

2. Other Credit Card Perks

A woman checks-in at the airport

There are loads of other credit card perks that make switching to plastic even more beneficial. For example, Chase Sapphire Reserve offers up to a $100 credit for TSA PreCheck or Global Entry and up to $300 in travel credits, and the American Express Gold Card offers $120 in Uber Cash and $120 in dining credits. 

A wide range of cards also offer cardholders free roadside assistance, travel insurance, FICO credit score and credit history updates, no foreign transaction fees and rental car insurance. 

Make sure to read the terms thoroughly, though, as some credit card issuers may also charge high annual fees that can cost more than the perks are worth. 

3. Streamline Budgeting

When paying cash for everything, it can be hard to track how much you spent and what category it falls under. With a credit card tracking all your purchases, it’s far easier to go back into your transaction history and review purchases. Also, some credit cards offer the ability to classify particular transactions, making it easier to move them to categories in your budget

4. Manage a Budget With Unstable Income

Managing personal finances with a steady income can be a challenge, but doing so with an unstable or variable income, like working on commission or freelancing, can be significantly harder. It may seem like a constant game of catch-up, as you scramble to pay bills as money trickles in.

Instead of playing catch-up, using a credit card to manage your living expenses while letting your cash collect in your checking account creates a ready-made record of spending. At the end of each month, pay off the credit card with the cash you saved in your checking account

The Credit Card Caveat

While credit cards offer many safety benefits and perks, there is a caveat to making the shift to the plastic life. It’s easy to rack up credit card debt and be tempted to make only the minimum payment. Doing so can ultimately lead to interest charges and a virtually endless credit card debt cycle. 

If you choose to switch to safer, more perk-filled credit cards, committing to paying off the entire credit card balance within the interest grace period will make the credit cardsperks and added safety worthwhile.

Tally

An app like Tally can help you manage your credit cards. Instead of juggling multiple due dates and balances, you can make just one monthly payment, and Tally will handle the rest.  

Credit Cards Can Be a Safe Bet

A person makes a contactless payment in a cafe

Credit cards aren’t the first things that come to mind when thinking about financial and physical safety, but they can help if you’ve been an avid cash user. In the credit vs. cash argument, credit comes out on top in safety and security for five main reasons: 

  • Cash lost is gone forever.
  • Credit cards have strong fraud protection.
  • Credit card fraud has no immediate impact on your cash flow.
  • Credit cards offer a full online transaction history.
  • Cash can be dirty, given its composition of cotton and linen that has crevices to hold onto germs.

On top of these safety issues, the credit vs. cash argument also hinges on the various perks and other financial benefits credit cards offer. Just make sure you’re committed to paying off that credit card balance every month to avoid interest charges and potentially falling into a debt cycle.