Welcome back to closing bell on cheddar news everyone.
Well, once the only form of payment, cold
hard cash is in a tough spot in an increasingly
online world. And while the cashless trend started gaining
steam in the years leading up to the pandemic,
the crisis, no doubt accelerating the transition to contact
list transactions. Well, despite it's dwindling use.
Now, cash is still important for key demographics,
particularly lower income americans and using it may actually help
you spend less than you would with a credit card
. I've seen that firsthand these days. So joining
me now is Caleb silver editor in chief and investopedia
Caleb always good to see you. What are the
trends that we're seeing here? The trends are pretty
obvious, but about four in 10 americans say they
use no cash at all. That's according to a
Pew Center recent survey, which shouldn't surprise us.
Uh, the older americans are favor more cash.
I'd like to have a little cash on hand.
Younger americans don't, but folks earning less than$30,000
they rely on cash a lot. Don't forget there's
at least 14% of americans who are unbanked or under
represented in the financial sector. So a lot of
folks still depend and there's plenty of good reasons,
but the use of cash has been dwindling year after
year after year and it was accelerated during the pandemic
. So, you know, one thing I've noticed
Caleb even just these past few months or so is
for instance at my nail salon whenever I treat myself
to a manicure, if I pay in cash,
I will get a cheaper price these days than if
I pay with a credit card. And I think
that's just because they're basically waving that additional credit card
fee. Is that a trend that you've seen?
Absolutely. And that credit card fee can be as
high as 4% for some cards and some businesses.
So businesses are always looking for a way, especially
now with inflation, but people potentially pulling back to
make it easier on their customers and make it easier
on themselves so they don't have to pay the transaction
fee on the back end. You'll find that,
you know in nail salons, you'll find that at
my barbershop we go through the same conversation over there
even at my mechanic, sometimes better price for cash
. So you still have a a lot of needs
for it. And there's plenty of benefits to to
having some at least on you if you can.
And part of that is just controlling your impulse purchases
when you have that credit card, it's easy to
make those purchases without thinking of it because you're not
seeing that bill until the end of the month and
you're just kind of putting that out of your mind
. Also avoiding those transaction fees as we just talked
about. Plus don't forget around the world the U
. S. Dollar, especially the$100 bill.
Still a very very powerful note, very powerful piece
of legal tender outside the U. S. So
that's useful. And also tipping, You want to
tip your manicurist, you wanna tip uh you know
a bartender, you want to tip the hotel bellhops
. It's very useful in that respect. So it's
good to have a little cash on you. Okay
so we talked about the pros. I agree gotta
tip those manicure as well. They do a good
job and I'm sure your barber as well Caleb your
hair always looks very nice on camera. Let's um
let's talk about the cons though. I think some
people who don't use cash right? And they have
their own reasons for instance for not wanting to use
it. What are those? Well a lot of
folks don't trust credit the credit card industry. A
lot of folks um you know don't necessarily, in
terms of folks who not wanting to use cash,
they're not able to build their credit history if they're
not using a credit card credit card. Um So
you want to be able to build that history and
get those rewards points. A lot of obviously credit
card companies even debit card companies are offering rewards points
cash back on shopping airline points, hotel points.
What have you, even the ability to get cash
to make purchases through some of the inside apps there
. And also you don't have access to e commerce
or e banking if you're purely cash using individual.
But that said there's a lot of folks that don't
even have access to the digital world and they don't
have, they're not banked, they don't have credit
cards, they don't have credit histories, some may
not even be paying taxes. And cash is the
only medium that they can use. And that's why
you still see a lot of folks using it.
Let me ask you about Cryptocurrency, how that might
impact the cash world as well because that would obviously
be exclusively digital. Are you seeing the trends that
we see in Cryptocurrency Caleb even though the price of
these assets like Bitcoin is down significantly have any impact
on the future of cash? Well very clearly and
we're already seeing it happen in some countries a little
less successful in some places like El Salvador where they
try to make it legal tender and give everybody Bitcoin
. But when the price of Bitcoin falls, that
value sort of wipes away the the value proposition that
said there are more and more vendors, there are
more and more companies that are offering crypto for using
their their services. Mastercard was out with news today
that it's offering access to Bitcoin. Mastercard holders.
We know Fidelity is gonna be offering Bitcoin to four
oh one K users by the end of the year
or by the end of next year. So we
know that that's happening and you know one of the
most popular questions we get on investopedia Christie is what
is money and I don't think that is necessarily a
baseline question of what is this thing I have in
my pocket. But what is it actually, is
it legal tender? Is it the ability to transact
between people? Is it Cryptocurrency in the future of
money? So it's become a very metaphysical question and
the use of cash has also become sort of metaphysical
in the way we think about commerce and transacting with
one another and within businesses. Here's another question for
you Caleb, I don't know if there's sort of
like a universal tip here in terms of what is
the appropriate amount of cash to have on hand?
What is a safe amount of cash to have on
hand? Do you ever interact with your viewers at
all and um readers about that? Yeah, we
get that question all the time. And there's a
lot of different answers on that cash on hand,
not necessarily cash in your pocket walking around, but
cash on hand in the house, maybe$1000 and
maybe in small denomination bills. That's usually what we
recommend for those extra things that tipping of the you
know the guy who who takes care of the tree
limb that falls on your property or the newspaper delivery
guy or for some reasons like that. The cleaner
dropping things off. So cash on hand is useful
around the home, you never know when you're gonna
have that emergency, You never know when you know
your your banking if you do online bank that goes
offline. So it's good to have something we say
about 1000 bucks in terms of walking around cash.
It's never a bad idea if you can have that
$20 bill or even 100 bucks stashed away in the
deep part of your wallet just in case of emergency
. Out driving, you need to get cash someplace
or you know, it's late at night, you
need that cash for one reason or the other,
it's useful to have some on you. I just
wouldn't have that much because on the one hand,
it helps you, on the impulse buying. On
the other hand, cash is easy to go right
through your hands if you're, if you're not careful
when you're spending it. That's very true. Got
to be careful. Um Caleb, Sylmar, Thank
you as always Caleb the editor in chief of investor 00:06:34.146 --> pdf