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Occasionally, I read a newspaper article or web posting where the author prophesies that digital payment systems will eventually dominate the economy, and cash (currency and coinage) will become obsolete.
Not so fast.
While the use of digital payment technology is widespread and growing, cash will remain an important backstop in times when digital payment systems fail. And they do fail. Unfortunately, power grids and communication networks aren’t as robust as we’d like to believe.
We know that severe weather events can knock out power grids, and software glitches can take down portions of the internet. Electronic payments won’t work when there is no power or no internet communication. Under those circumstances, cash is king.
Consider what happened in Texas in February, 2021. Winter storms dealt a blow to the Texas power grid leaving millions of homes and businesses without electricity for over two weeks. During the blackout, people were lined up in freezing temperatures to buy desperately needed groceries, fuel, propane, and other goods. Unfortunately, you couldn’t transact using a credit or debit card because merchant systems were down. But you could purchase whatever you needed with cash.
Spain suffered a power outage in June 2025 that caused widespread failures of digital payment systems. Businesses had to rely on cash transactions.
A software bug in CrowdStrike’s security software in July 2024 temporarily halted digital payment systems globally. Once again, you could only transact using cash during the outage.
During such crises, running to the ATM to get cash won’t help because ATMs are also down.
To protect yourself when digital payments are not possible, it behooves you to consider keeping some cash in safe places around the house where it’s readily available during an emergency.
We’re not talking about hiding a twenty dollar bill in your sock drawer. You’ll probably need at least a few hundred available dollars to get through a crisis.
Dennis Friedman, in his HumbleDollar posting “Comforts of Cash,” shared his thoughts about keeping cash available. He also offered additional arguments for having ready access to cash:
– If you shop at crafts fairs or flea markets, you may discover that some vendors are unable or unwilling to accept credit cards. Cash allows you to purchase the item that catches your eye.
– Some businesses offer discounts to patrons who pay in cash to avoid paying a merchant fee to a credit card company.
If you are concerned about privacy, you may chafe at the thought that every one of your digital transactions is recorded somewhere, subject to hacking by third parties. A cash transaction has the advantage of being anonymous. And no scammer can hack the cash in your pocket.
For those interested in pursuing this topic further, may I recommend the book The Power of Cash by Jay Zagorsky. Its subtitle: “Why Using Paper Money Is Good For You and Society.”
I like paying with cash at stores when I can. I don’t know why, but I do. Maybe it’s because I know deep down it is costing the merchant 3% or whatever for my card transaction, which is ultimately getting passed on to the customer. As for power outage situations, it seems that the pendulum has swung so far toward card use that businesses will be forced to make concessions to serve people when there’s no power. I don’t know what those concessions look like, but I can’t imagine a business letting everyone go without, say, bottled water because only 25% of the people have the cash available to purchase it.
Loved your article. Yes I believe it’s a little prudent to keep some cash on hand. Don’t think the Girl Scouts are taking credit cards at your door…but they might. Also I don’t think my grandkids would want grandpa giving them money via a credit card. I like the joke I made up. It goes like this; ‘I finally got some cash only to find out they only take credit.” Ain’t that just like life. I still like what Dave Ramsey says, “Cash is king”.
A lot of Girl Scout troops are taking credit cards now. Maybe not when going door-to-door, but when you see them at booth sales at grocery stores, etc.
Keep some can in your house. Problem solved. Then use your credit cards and online payments as usual
thanks For the article but I do not believe in cash. The instances that you mention where you would need cash are so rare that you are more likely to be hit by lightning. Also, cash promotes undeclared income to the IRS because in this country we do not have a good way to make sure a seller of goods and services properly declares cash payments.
OK, OK, let’s agree that there are some circumstances when having cash on hand is helpful. Let’s remember that there are huge advantages to credit cards – and numerous reasons why they were developed to deal with the downsides of cash.
If cash is stolen or lost, it’s a complete loss. If my credit card is stolen or lost, one phone call / app tap limits my liability and keeps me whole.
No risk of (inadvertently) holding counterfeit money, which may get rejected by a cashier with a detection device.
If I go to a flea market where vendors only take cash, I have to remember to bring currency ahead of time. I always carry my phone or cards for typical transactions.
And have you ever opened a drawer or put on an old pair of pants and found money that you squirreled away months/years earlier? It feels great. But that’s effectively money that you wrote off when you hid it earlier. Not a great way to handle one’s assets.
Yes, a few hundred dollars in a safe place is smart insurance. But as a way of life? No thanks.
Well said Phillip, and great advice, but one caveat. When you use your credit card to pay for a purchase, you have much power over your vendor, because you can dispute the bill. So be careful out there paying $1000’s to vendors with cash, they win you lose. Sure for an emergency, my parents taught me to have some Cash is King in your pocket, and that makes Good Sense.
Having lived in hurricane territory all of my life I know the value of having cash when the power is out. Hurricanes provide you some warning. However not all events do. We had a straight line wind storm in Memphis in the early 2000s (dubbed Hurricane Elvis) that flattened the city and had power out for 2 weeks. Stores were taking cash, but if you didn’t already have it squirreled away you couldn’t get it from the ATM with the power out. Incidentally nowhere had change to give either. So I learned to not only have cash handy but have it in small bills, too (1s, 5s, 10s and 20s).
If I’m staying at a BnB or small hotel, I call to see if they offer a cash discount and bring enough cash for my hotel stay.
I went through Hurricane Helene in Western NC. I’m grateful that I had plenty of cash to get through a week without power and internet.
I always carry cash to give as tips to servers in restaurants and for venues that give a cash discount.
I’m old enough to remember, before the credit card companies killed them off, when some stores used to have cash only, checkout lanes. They gave you 5% off your purchase for using cash.
A lot of contractors are giving discounts for paying with cash. This past summer my bank ran out of hundred dollar bills a few times because people were withdrawing large amounts of cash to pay for home improvement projects.
Another plus for using cash is that, unlike a credit card, your purchase can’t be traced by the government, as long as you also don’t use a store rewards program when you check out.
I had a relative go through the power outage in Texas in ’21 and his apartment got down to 32 degrees for days. Fortunately, he had enough water and shelf stable food to get by. Having some scratch handy is a good idea.
All good points, Phillip. I’m a fan of keeping cash on hand, for the reasons you cite. Here’s another: On occasion, we have an opportunity for spontaneous giving that just won’t wait. At those times, old-fashioned cash is speedier than digital at getting the job done for someone in need.
One of those opportunities for spontaneous giving might include the tip jar at take-out eateries.
Thanks for recommending ‘The Power of Cash by Jay Zagorsky’. I have enjoyed listening to the audio book version on Hoopla thru my local public library.
Philip, you’re singing to the choir.
This isn’t some doomsday theory, you have cited plenty of great examples of incidents that have already occurred. I like to keep a significant amount of cash in the house. Someone has also suggested having some smaller denominations, as some vendors may not be able to make change.
Dan, thanks for mentioning the need to have smaller denominations available. If you only stockpile large denomination bills, you might find it difficult to purchase simple items in, say, a convenience store.
Well stated Philip!