According to an analysis by Capital One, 47.8% of American adults make no cash purchases in a typical week. And in the U.S., an estimated 87.4% of all transactions are cashless.

With card and digital payments emerging as the primary payment methods for most consumers, you might wonder how much cash you should keep in your wallet — if any at all.

Here’s a look at the benefits and drawbacks of carrying cash, and how to go about deciding how much you should keep on hand.

How much cash should I have on hand?

Cash may no longer be king, but it’s not obsolete by any means. There are instances when paying in cash might be more beneficial than using a debit card, credit card, or digital wallet. For instance, many small businesses prefer cash and may even offer a small discount because it saves them the fees associated with credit card transactions.

Experts say it’s common for most Americans to carry $20 or $30 in cash. Ultimately, however, the amount of cash you should have on hand depends on your unique financial situation.

When determining the right amount to carry in your wallet, consider how often you use cash and for what types of expenses. Do you prefer to save up cash for big-ticket purchases, or do you mainly rely on cash for smaller transactions such as tipping?

Read more: 6 times you may be charged extra for paying in cash

Either way, it’s best to minimize the amount of cash you keep on hand. For one, cash isn’t insured against loss unless it's deposited in a bank, making it vulnerable to damage, loss, or theft. Plus, physical cash doesn’t have the opportunity to earn interest or grow in value. And over time, inflation reduces the purchasing power of cash.

That said, you do want to ensure your spending money and emergency savings are “liquid.” For money that you expect to need in the near future, consider depositing it in a federally insured bank account, such as a checking account or high-yield savings account. This allows you to generate interest, which helps protect your purchasing power and increase your wealth over time, while also maintaining easy access to the funds.

Read more: Are high-yield checking accounts worth it?

Pros and cons of carrying cash

Having some cash in your wallet can be helpful when you find yourself in a situation where a merchant or retailer doesn’t accept cards or digital payments. But there are definitely downsides to carrying cash too.

Here are some of the major pros and cons of cash to consider when evaluating how much you should keep on hand.

Pros:

• POS systems can crash: Point of sale (POS) systems can go down, just like any other online system. Carrying cash ensures you always have a way to pay for your goods or services, even when technology fails.

• Avoids ATM fees: Pulling out money from an in-network ATM ahead of time allows you to avoid ATM fees if you end up needing cash in a pinch.

• Can be a safer way to pay: Each time you swipe your card, you could be putting yourself at risk of ATM skimming. This happens when someone gains access to your debit card information via an ATM or card payment terminal using a special device installed on the card reader. If you’re not visiting a trusted retailer, using cash to make a purchase could be a safer option.

• Some merchants are cash-only: Some establishments may charge a fee for using a card, especially for smaller purchases.

Cons:

• No fraud protection: Carrying physical cash makes you a target for pickpockets. And if your cash is stolen, tracking it down is nearly impossible. Card and digital payment methods, on the other hand, have fraud protection in place.

• May not be accepted everywhere: Some retailers may only accept card or digital payments.

• Difficulty tracking spending: If you use a budgeting app or other digital method of managing your budget, cash payments can be hard to track.

• No interest earnings: Carrying too much cash could cost you. Your money doesn’t earn interest when it’s sitting in your wallet or at home. Keeping a portion of your money in your checking account for regular bills and expenses and in a high-yield savings account for longer-term goals ensures your money stays safe and grows thanks to compound interest.

Ultimately, keeping a small amount of cash (around $50 to $100) for daily expenses such as tipping, small purchases, or situations where credit/debit cards are not accepted can be practical. You may want to carry a bit more if you’re traveling, depending on the destination and availability of ATMs or card acceptance.

However, it’s possible to have too much cash. To ensure your money is protected and generating interest, it’s best to deposit it in a bank account and/or invest it according to your financial goals.