Cash is king? The pros and cons of paying with cash as more than half of Brits are asked to use it

More than half of people in the UK were encouraged to pay in cash by businesses in September, according to research commissioned by cash machine network Link.

The encouragement ranged from staff directly asking customers if they could pay in cash to businesses making it clear that they preferred cash payments.

The types of businesses encouraging customers to use cash included:

• cafés
• restaurants
• pubs
• retail stores
• supermarkets
• independent shops
• barbers
• hairdressers
• beauty salons
• markets

The research, which surveyed more than 2,100 people across the UK, also found that three-quarters of those who were asked to pay in cash went on to use it for their purchases.

There were also regional differences in how people responded to requests to pay in cash. In Northern Ireland, 69% of respondents said they had been asked to pay in cash, with 88% of those asked complying.

Meanwhile, 82% of those asked in Scotland and 78% in Wales paid with cash.

With cash still playing a role in everyday spending, what are the pros and cons of using it, and how can you make the most of paying with physical money?

The pros of paying with cash

It can help you stick to a budget

One of the biggest advantages of using cash is that it can make budgeting easier. When you can physically see how much money you have left, you may find it easier to keep track of your spending and avoid going over budget.

Handing over notes and coins can also make purchases feel more tangible than tapping a card or phone. This can help you think twice before making impulse purchases and encourage you to prioritise what you really need.

It offers greater privacy

Cash payments don’t create the same digital transaction records as card payments. This means you can make everyday purchases without each transaction appearing on your bank statement.

For some people, this added privacy is a major benefit. Cash can also reduce the amount of personal and financial information shared electronically during a transaction.

You won't pay interest or card fees

Unlike borrowing on a credit card or using an overdraft, spending cash you already have doesn’t incur interest. You also avoid any card processing fees that might otherwise apply to a transaction, although these are not usually charged directly to customers in many shops.

Paying with cash can therefore help you avoid taking on debt and make it easier to keep your spending within your means.

It's accessible to more people

Cash provides a straightforward way to pay for goods and services without needing a bank account, a payment card, a smartphone or a digital wallet.

This can be particularly helpful for children learning how to manage money, older people who may be less comfortable with digital payments, and anyone who has difficulty accessing or using electronic banking services.

It can be useful when technology fails

Card machines can stop working, mobile payment services can experience outages, and your phone battery can run out at the most inconvenient time.

Having some cash available gives you another way to pay if electronic payment methods are temporarily unavailable.

The cons of paying with cash

Lost or stolen money is difficult to recover

If you lose your wallet or someone steals your cash, there is generally no straightforward way to trace or recover the money. Unlike many unauthorised electronic transactions, cash theft doesn’t usually come with a bank-led reimbursement process.

You could receive counterfeit notes

Although counterfeit banknotes aren’t thar common, there’s a risk you could unknowingly accept one when receiving change or making a cash transaction. Passing a counterfeit note on, even unknowingly, can also cause problems.

You could miss out on cashback and rewards

Some credit cards offer cashback, reward points or travel miles when you make eligible purchases. Paying with cash means you won't earn those card-based rewards.

But remember, these benefits aren’t always worth it if you end up spending more than you can afford or carrying a balance that attracts interest.

You may have less protection if something goes wrong

When you pay in cash, you won't have access to card-specific protections such as chargebacks. If an item fails to arrive or isn’t as described, resolving the problem may be more difficult, particularly if the seller disputes what happened.

This doesn't mean you lose all your consumer rights when paying with cash. Your legal rights can still apply, depending on the purchase and circumstances, but you may have fewer convenient ways to challenge the payment.

You can't use cash for most online purchases

Cash is useful for shopping in person, but isn’t generally accepted as a direct payment method when shopping online. This can limit your options when booking services, buying tickets or ordering goods for delivery.

Cash won't help you build a credit history

Cash payments are not reported to credit reference agencies, so paying with cash won't help you build or improve your credit history.

This can matter if you plan to apply for a mortgage, loan or credit card in the future, as lenders may use your credit history to assess your application.

Some businesses no longer accept cash

Although many businesses still accept notes and coins, some shops, restaurants, service providers and ticketed venues operate on a cashless basis. You could therefore find yourself unable to pay if you rely exclusively on physical money.

Withdrawing cash can sometimes cost you money

Most cash machines in the UK offer free withdrawals, but some charge a fee. Depending on your account and where you withdraw money, additional charges may also apply.

So, is paying with cash worth it?

Cash can be useful if you want to manage your budget, keep your spending under control and have a backup when electronic payments aren't available.

It can also offer privacy and provide an accessible payment option for people who prefer not to use cards or smartphones.

But, it comes with trade-offs. Lost money can be difficult to recover, some businesses won't accept it, and cash payments do not offer the same card-specific dispute options or credit-building benefits.

The right choice depends on your spending habits, financial circumstances and what makes managing your money easiest for you.