Knowing when to pay cash and when to use a credit card can save you money, maximize your ability to evaluate your spending habits, an even make you a few extra dollars.

I’m a huge supporter of using a credit card to pay for nearly every purchase as it allows me to earn some interest on my money in the bank, get cash back rewards, and of course protect me against unauthorized purchases.

Plus I can review my spending habits on a monthly and yearly basis, cash slips away too easily and is harder to track.

As much as I support responsible consumers using their credit card for everything, a responsible consumer knows that sometimes using cash is the smart thing to do.

This in no one way condones the ramblings of Dave Ramsey by the way, in case you were thinking about him and his ‘cash only’ ways. The article focuses on responsible spending and getting the most out of your money by knowing when to pay cash and when to pay with credit.

If you don’t have credit card debt and consider yourself responsible enough to handle a credit card and pay it off in full each month, use the card for nearly every purchase you make.

But for all of us credit card users, there are a few times when paying cash is a far smarter financial move:

Pay cash whenever a fee is charged to use credit.

Some merchants may charge extra for paying with credit either in the form of a processing fee or simply a higher price. Gas stations sometimes charge a few cents more per gallon for credit card users. Wrong I know, but still something that goes on.

Leave the credit card in your wallet and pay cash for any purchases that require a minimum credit card amount (you’ll end up spending more just to make the minimum) or charge a fee. This practice is actually against Visa and Mastercard merchant terms, but that doesn’t stop some merchants.

If there is a risk of your card number getting stolen.

Sometimes when you pay with a credit card, the card is taken out of your sight by a waiter or employee. While most of these people are honest and hardworking, some are not. If you’ve heard of credit card theft at the place you’ll be paying at or if something doesn’t see right, use cash.

The merchant offers a discount for cash purchases.

Though rare, this does happen from time to time. Merchants avoid processing fees when they take cash, so some may encourage cash purchases by offering slightly lower prices for cash customers.

Close to your limit.

If you are close to your credit card limit you’ll want to switch to cash until the balance is paid off. Otherwise you risk going over your limit and getting hit with higher rates and a big over the limit fee.

You are out with friends and splitting a tab and someone else has already said they are paying with plastic.

It is a hassle to both your friends and the server to use more than one credit/debit card on a bill. Unless you are the only one paying with plastic, pay your part in cash to your friend who is using plastic. This way only one card has to be swiped and you’ve all paid your fair share.

You can’t pay with credit.

Basically cash isn’t secure and it does little to make you any extra money. But sometimes you can’t avoid using cash so always carry a small amount of cash on you just in case you can’t use your credit card.

These are really the only times that cash needs to be used for day to day purchases. Again, if you are a responsible consumer and credit card user you’ll get a lot more out of your credit card by using it for most purchases while being savvy enough to know when to pay in cold hard cash.