SmartyPig®

Long supported by famed financial advisor Dave Ramsey, the "Cash Only" movement recently gained another bold-named convert, Suze Orman. SmartyPig Savers, you were at the forefront of a growing celebrity trend!

On her CNBC show she encouraged viewers to join her, "Let's go back to the good old days," she said. "Let's go back to the times when you literally paid cash for everything. That's right. Cash. Stop using your credit cards altogether."

Ms. Orman was inspired to jump on the "Cash Only" bandwagon in response to predatory credit card companies, a topic we recently covered in our blog.  Moving away from credit cards en masse would send a powerful message to credit card companies that have resorted to extreme tactics such as sharply raising rates and closing accounts after brief periods of inactivity, targeting even those who use credit cards responsibly by paying bills on time and not carrying balances. If credit card companies are going to treat us as if they don't value our business, maybe they don't deserve our business.

A shift to cash only requires some initial planning. SmartyPig can be a helpful tool for saving up for specific goals. General savings accounts are great, but experts say that saving is easier with defined goals because you can visualize how the money will be spent. Simply put: you focus on the prize rather than the process. And SmartyPig makes saving easy, social and rewarding: With a competitive interest rate of 2.01% APY (currently the highest no catch rate), cash boosts of up to 12%, and the option to invite friends and family to contribute to goals, you can end up with significantly more than you personally contributed.

If you are going on a cash-only diet, we recommend that you cut rather than cancel your cards. Cancelling cards can impact your credit score, cutting them up makes them just as inaccessible. Recent stats from Experian indicate that the average consumer carries 4.5 pieces of plastic — 4.5 potential paths into debt! (Not to mention that now they can lead to sudden hikes in interest, and hidden fees.)  By eliminating extra cards, you limit opportunities to spend money you don't have. It goes without saying that you should aim your scissors first at the cards that have the highest rates, lowest balances or most punitive fees.

We'd love to hear your thoughts on whether or not you already have or will be moving away from credit cards, and any tips you have for SmartyPig customers who might be considering a cash-only diet.

For additional reading on this topic, check out this post on GetRichSlowly. Staff writer Adam Baker talks about how he and his wife decided to make the move away from credit, sharing the list of pros and cons that helped them ditch the plastic.

Thanks, The SmartyPig Team
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