We stopped carrying cash because it was "too dangerous." Now they're telling us it's "too expensive." Tufts University recently released a study that says cash costs the United States $200 billion each year in fees, theft, and lost tax revenue.
Cash is dirty, spreads germs, gets lost, torn, and stolen. In fact, I've just about eliminated using cash altogether -- and now I'm taking one final step in the process:
I'm going back to cash. And so should you.
We've become so dependent on debit cards, smartphone apps, PayPal, Google Wallet, Square and every other technical device or solution designed to replace cash that we are actually being conditioned to think of hard currency as obsolete. You have to count it, for Pete's sake!
But one good reason to head back to greenbacks is to spend less. Buying stuff with real money is just inconvenient. And you've probably heard the research about how paying with cash causes us to spend less than when we make purchases with credit cards. Somehow our Stone Age minds relate more to counting out the skins one-by-one for a purchase, rather than simply swiping a plastic promise to pay.
But the reason I'm kicking it old school and going back to bills is simple. You can't hack cash.
Recently a team of hackers infiltrated the cash registers at a Nordstrom store in Florida. We're talking six guys going in, "distracting" the staff and installing skimming devices inside the cash registers. Distracted the staff? Heck, they must have been hypnotized or something.
It was all an effort to skim credit card info. And as security experts note, the alleged thieves took a lot of time and effort to do something that could have been accomplished much more easily by simply hacking the data wirelessly. And that's just the point. Skimming credit and debit card info has gotten so easy. It happens practically all the time.
It happened to me
One of my credit cards was skimmed a couple of years back, and while losses are limited, the hassle practically never ends. Once reported, credit cards are legally protected for fraudulent charges exceeding $50. But to this day, I get junk mail that was triggered by the barrage of phony charges made on my card. And I just barely missed suffering a full-on identity theft.
The Secret Service says skimming has become the single biggest threat to the credit card industry. And an astounding 70% of credit card skimming is reported to take place in restaurants, according to the credit reporting agency Transunion. And I really like restaurants.
We're way behind in credit card security here in the U.S.
All of our data is stored -- unencrypted -- on that magnetic strip on the back of the card. According to Consumer Reports, the U.S., along with some non-industrialized countries in Africa (seriously), are the only nations on the planet still using this quaint, 1970s technology.
Meanwhile, around the globe
The rest of the world uses Europay MasterCard Visa (EMV) smart cards, which have an embedded computer chip, encrypted data, and multiple layers of security. Consumer Reports says fraud losses fell by 50%, and card counterfeiting dropped by 78% in just the first year after EMV cards were introduced in France way back in 1992.
Apparently the losses banks incur on credit card fraud aren't yet high enough to foot the bill for a complete system conversion in the U.S. But it's not like American crooks aren't trying.
The more wireless our money becomes, the greater the chances are of having our pockets virtually picked.
Bitcoin may be the ultimate solution. But the "anonymous" digital dollars are already suffering from wallet hacks. And as Bitcoins grow in popularity, the filchers will follow. Perhaps further development will make Bitcoin the best bet for portable payments, but right now I can't buy a plate of catfish filets with them, so no crypto-currency for me, thanks.
I'll still have to shop online with a credit card or PayPal, and I'll never go back to writing checks and licking stamps to pay bills – but for everything else, it's cash on the barrelhead. How often do you get to use that idiom?
The (at least) one snag to this plan is the fact that I'll actually have to go to a physical, bricks and mortar bank to get cash. They still have those, don't they? The last time I went into a bank lobby I was taking a shortcut to the nearest men's room. Of course, I could go to an ATM for cash -- but that's where even more credit card skimming occurs.
I never said going from plastic to paper was going to be easy.
Hal M. Bundrick is a Certified Financial Planner™ and former financial advisor and senior investment specialist for Wall Street firms. He writes for TheMoneyPivot.com. Follow him on Twitter: @HalMBundrick. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.