Last week, while listening to a local radio show I heard a presenter tell the following story. While rummaging through her pockets in search of her keys she discovered what she initially thought was a Dh20 note.

Thrilled, she peeled the note open, only to discover it was, in fact, not a Dh20 but a Dh500 note instead! This story made me smile — everyone must agree there is nothing quite like finding money you didn't know you had, but it also got me thinking, surely most people don't misplace Dh500 notes, and if they do, how often does this happen?

How much money must get accidentally thrown away, fall out of our pockets or disintegrate in the washing machine?

So why do people in the UAE carry around so much cash? Part of this behavioural pattern is to do with habit. Data from 2005 shows there were 1,451 ATMs in the UAE and only 18,471 points of sale which accepted debit or credit cards. More recently, consumers have developed a distrust of the banking industry following the global economic downturn. The world watched in dismay as banks like Icesave and Lehman Brothers collapsed overnight, with thousands of people losing their life savings. Across the globe, questions were raised over the safety of banks with some even debating whether their money would be more secure under the bed!

In spite of this, I'm pretty sure most people wouldn't consider keeping their salaries and life savings under their mattresses. So what are the benefits of keeping cash in a bank account and using a card to spend it?

Firstly, holding your money in a bank can offer you protection. That's why it's important to choose your bank carefully and to do a little background research rather than just opting for the nearest branch, or most convenient ATM. All banks are rated by agencies, the most well known being Moody's. The rating given to the bank will let you know how stable it is and give you an indication of how safe your money is.

Secondly, credit and debit cards offer considerably more security than cash. Debit cards allow you to keep track of your spending and they also only allow you to only spend the funds that you actually have in your account. Importantly, chip and pin technology has transformed the safety of bank cards, making fraud extremely difficult. Loose dirham notes have no safety mechanism: once they're lost, they're lost.

Credit cards have the same benefits and many come with consumer protection and insurance. So if you buy a faulty product with your credit card, the provider can help with this. For example, goods bought with some payment cards are covered for accidental loss and damage cover for up to 90 days after purchase.

Finally, paying by debit or credit card is more convenient than ever. Recent figures from the UAE Central Bank state that there are now over 3,500 ATMs in the UAE and over 50,000 outlets which accept debit cards and credit cards.

Plus, while unexpectedly finding a Dh500 note is a pleasure, unexpectedly losing one would not be, sadly, once it's gone, it's gone. So save yourself the cost and use a card instead.

— The columnist is the Head of Personal Banking, Lloyds TSB Middle East. The views expressed here are his own and do not necessarily reflect the views of Gulf News.