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Why Are We Still Using Cash ?


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On 10/24/2016 at 9:38 PM, msj said:

IMost people conduct legitimate business using $20's or less. 

 

I use $50's all the time. Just right for a tank of gas, some grocery orders (i walk/bike to the store often to get things fresh so a lot of my orders are smaller), a sit-down restaurant meal, a round of golf and other forms of entertainment, monthly bus pass during winter months, etc. 

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Seems like most of the recent posts in here are about utility and convenience. But that's not the only reason why cash is important.

There's an implicit understanding between depositors and banks that if you want to, you can go into the bank, close your account, and walk out with money. Without cash there is no way to do this. And if you cant go down and take it, then its not really your money.

I withdrew about 20k in cash from my business account last year. Most because I have a petty cash fund that my employees use to buy fuel, materials, etc. I don't do anything illegal, and I don't cheat on my taxes. Federal law requires banks to allow you to withdraw all your money as cash at any time. Withdrawals larger than 10k have to be reported by the bank to the the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC). They analyze the transactions to watch for crime, money laundering, etc, and they can trace the bills by serial number.

If you get rid of cash for the purpose of "fighting crime", then you will actually do the opposite. You will force the black market completely out of the financial system and they will adopt another medium of payment (alt currencies). If this happens, then the government loses the ability to monitor all those transactions COMPLETELY. They lose the ability to trace bills from one person to another, and they lose the ability to find out about many large transactions.

 

 

 

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On 10/27/2016 at 4:49 PM, dre said:

There's an implicit understanding between depositors and banks that if you want to, you can go into the bank, close your account, and walk out with money. Without cash there is no way to do this. And if you cant go down and take it, then its not really your money.

To prevent runs on banks all banks are allowed to impose a waiting period of a few days before you can withdraw your savings. This is never enforced but it is part of the 'contract' between banks are customers. Also people who want large amounts of cash often need call in advance to request withdrawals no matter what is going on with the bank.

Lastly, you don't need to take cash when you close your account. Banks can provide drafts which can be deposited anywhere else. Very few people with legitimate uses for cash would want large sums in cash. Your example of 20K for petty cash for a business seems absurdly high to me. A corporate credit card seems like a more rational way to deal with large purchases that employees need to make on behalf of the employer. That way you have a clear record of where the money was spent.

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A bank draft still requires you to use a bank to make a transaction.  Also, how do you make change for a bank draft without using a bank if there is no cash? Without cash, you will always need a third party (bank, credit card company etc) for any transaction involving money. Cash gives you type of independence that no other system can.

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ATM's are disappearing fast. It seems that people are gradually weaned off using cash. However, cash will never disappear completely simply because it would be more difficult to cheat in taxes if there is no cash and everybody wants to cheat in their taxes. Some of us just don't have the opportunity to do so.

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17 hours ago, -TSS- said:

ATM's are disappearing fast. It seems that people are gradually weaned off using cash. However, cash will never disappear completely simply because it would be more difficult to cheat in taxes if there is no cash and everybody wants to cheat in their taxes. Some of us just don't have the opportunity to do so.

You are conditioned to not use cash.

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19 hours ago, -TSS- said:

ATM's are disappearing fast. It seems that people are gradually weaned off using cash. However, cash will never disappear completely simply because it would be more difficult to cheat in taxes if there is no cash and everybody wants to cheat in their taxes. Some of us just don't have the opportunity to do so.

Weaned off because of the 2 to 3%  your bank makes on every transaction involving a debit or credit card.

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11 minutes ago, Wilber said:

So now a 7 year old has to have a bank account, a phone or iPad and a card reader plus give at least 2.5% of the transaction to their bank. This stuff may be convenient but it isn't free.

They can use their parent's gadgets/accounts. 

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1 hour ago, Wilber said:

So now a 7 year old has to have a bank account, a phone or iPad and a card reader plus give at least 2.5% of the transaction to their bank. This stuff may be convenient but it isn't free.

Why wouldn't a kid have a bank account? 

I had one around 6 or 7 as a means to learn about saving money etc etc. 

--------------------

There is still going to be cash around.

We probably will even still have $50 and $100 bills since inflation should make these the equivalent of tens/twenties within the next five to eight years. :D

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1 hour ago, msj said:

Why wouldn't a kid have a bank account? 

I had one around 6 or 7 as a means to learn about saving money etc etc. 

--------------------

There is still going to be cash around.

We probably will even still have $50 and $100 bills since inflation should make these the equivalent of tens/twenties within the next five to eight years. :D

A savings account sure but one that would eat up in fees more than you were depositing every month? I don't think kids want to sell lemonade just to support their bank.

 

I agree, we will always have cash and inflation will make it worth less, just like the money in our electronic accounts. How long before the nickel goes and the $5 bill becomes another coin.

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30 minutes ago, msj said:

Pretty sure the banks have no fee starter accounts to get the kids hooked on 0.0001% interest rates. :lol:

 

 

I'm sure they do but they won't include business accounts using debit and credit cards or the hardware, software and data required to operate them.

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Pretty sure almost every Canadian bank has options to pay no fees while you're under 18 and/or a student at high school/college. I certainly never paid any fees to my bank until I finished university. And of course if you are in the US, there are many banking options that do not charge fees for accounts and basic transactions, period. 

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