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Holiday Gift Guide

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6 reasons to use cash to pay for holiday purchases

Cash has fallen out of favor among consumers who find it easier to reach for a card in their wallets. Some shoppers may even wonder if people still carry cash when credit cards and debit cards have become so convenient and widely accepted? Actually, they do.

According to a recent study by LendEDU, 32 percent of 875 people surveyed preferred to use cash over cards for everyday purchases. Cash can be a smart choice for many purchases, including holiday spending. Here are six reasons why cash can be king once more.

1. Limits spending in a tangible way: A key benefit of using cash is that it presents a visual cue that spending should cease. If a shopper has set a $200 limit for holiday gifts, when that $200 in cash is gone, it's a surefire reminder that it is time to step away from the register and leave the store. It can be hard to view spending in real time when using credit or debit.

2. Bills are accepted everywhere. Unlike some credit cards, merchants will not turn away cash. This is especially helpful when shopping at small businesses or pop-up markets that are popular during the holidays. Local artisans or other niche vendors may only take cash as well.

3. Prevent second-guess impulse buys: Parting with hard-earned cash directly can be a great motivator to keep that $20 in your pocket instead of using it for a scratch-off lotto ticket or mall food court snack. Watching cash supplies dwindle may prevent shoppers from making unwise purchases.

4. Cash facilitates tipping. Cash is often best for tipping servers and delivery personnel. According to Kim Palmer, a credit card guru at NerdWallet, a popular financial advice site, recipients of tips prefer cash because they get it immediately. A tip on a card may only be parceled out at the end of the week.

5. Losing cash doesn't affect credit. Although many people say carrying cash is riskier than sticking to credit, the financial expert Dave Ramsey says differently. While parting with lost cash can be a blow, the risk of identity theft, and sorting through canceling credit and debit cards when they go missing, can be an even bigger threat.

6. Cash may score deals. Paying in cash can be a great bargaining chip at retailers who may offer discounts or waive fees for cash purchases.

There's something to be said about paying in cash, especially during the holidays when sticking to budgets can be challenging.

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