Comments on: Forget Cashback Rewards, Go Cash

By: aquaswim47

aquaswim47 — Mon, 27 Jul 2009 03:09:11 +0000

I really like InvestorBlogger’s comments. I personally have a 5% rewards card (and that might last awhile). If it no longer is 5% cash back than I won’t use it anymore. It is the Pentagon CU card.

By: aquaswim47

aquaswim47 — Mon, 27 Jul 2009 03:07:30 +0000

Shell is notorious for charging more to credit customers than cash customers. I am fine with them doing that if they advertise “the higher price” and give a cash price as well (that is a reduction).

By: No Debt Plan

No Debt Plan — Thu, 16 Jul 2009 17:58:33 +0000

My AMEX Blue Cash pays 5% for gas (in the second tier). So it would depend on where I was in my rewards cycle — if I was still in the 1st tier I wouldn’t pay with credit.

Of course I never carry any cash, so that’s a consideration as well.

By: Dan

Dan — Tue, 14 Jul 2009 01:59:35 +0000

It’s interesting that everyone has their own method and there is no clear consensus on the cash vs. credit card debate. I find it ironic that people use their credit cards, for instance, to save 1% back on everything (plus other rewards in some cases), yet if no one used credit cards, all prices would probably be 3-5% cheaper. The way I see it though, is that my payment habits will not affect the market as a whole (I realize this type of thinking has a tendency to get people in trouble, but it’s true). Therefore, I will charge everything I possibly can, regardless how small the purchase price. In CT, I’d say at least 50% of all gas stations now charge different prices for gas based on payment type. Since I get 3% back on gas purchases, I would expect to see a difference > $.10/gallon before I opted to pay cash. The difference is usually $.04, but is often as high as $.10/gallon.

By: Mark @ The Debt Hawk

Mark @ The Debt Hawk — Mon, 13 Jul 2009 19:04:27 +0000

I like to use cash because I usually spend less money that way. There is something about having to hand cash over to someone that slows down my spending. Debit cards and credit cards just don’t have the same barrier to spending.

By: Eric

Eric — Wed, 08 Jul 2009 04:48:59 +0000

Interesting. Haven’t seen it where I’m at yet. But unless the gas station offers more than a 5% discount, I’m putting gas on the card.

By: Nathan

Nathan — Tue, 07 Jul 2009 22:19:25 +0000

Using cash is an annoyance. I never carry coins because they just jingle and make holes in my pocket. I don’t like to waste my time filling up as often, so I always fill to the max. Since this almost never turns out to be a round number, I use my card.

With my rewards credit card at 3% cash back, I need to see a $0.09 cash discount per gallon before it’s cheaper to pay with cash.

As a side note, I wish I were still seeing $2.50 gas. It’s $3 everywhere in California.

By: Kevin at OutOfYourRut

Kevin at OutOfYourRut — Tue, 07 Jul 2009 17:50:33 +0000

Kenneth–You raise a good point about consumers thinking “credit card spending is better.”

At this point it’s probably more a societal norm than anything else, juiced by the bells and whistles added by the banks to get us comfortable with using them.

Though there are nuances between the two, bank debit cards function substantially the same way as credit cards, minus the debt overhang, but credit cards have been around longer. We’ve lowered our defenses in regard to credit cards which is why so many people are in trouble with them. Though they have certain benefits, they can seemlessly slip into debt.

By: InvestorBlogger

InvestorBlogger — Tue, 07 Jul 2009 16:40:08 +0000

We run a business here in Taiwan, and we specifically don’t take credit cards in any form. Why? The best prices are for cash, and that’s what we give our customers.

While we may win a few extra dollars, having that extra middleman just isn’t worth the hassle of letting someone else look after our money.

With installation fees, monthly fees, fees on each transaction, and numerous penalty fees that may apply, plus the risk of the CC credit card NOT paying up promptly due to chargebacks, we could actually end up out of pocket for transactions that, cashwise, would already have been ’settled’.

The upshot is that, for the foreseeable future, we are not likely to take Credit cards. If we were to, we’d likely have to increase our prices for ALL of our customers by at least 5% to cover most costs. This is not an unusual choice in many more cash-based economies.

I really don’t understand why consumers think credit card spending is better. It’s not. It’s not better for you, it’s not better for me. And it’s not generally better for society.

Kenneth

By: dilbert69

dilbert69 — Tue, 07 Jul 2009 16:15:49 +0000

My HSBC DirectRewards MasterCard pays 5% cash on gas, groceries, and drugstore purchases, so it generally pays to pay the credit price and get the 5% back. I pay the bill in full each payday (every 14 days), so I never pay a penny of interest, and I pay it through my bank’s online bill pay service, so I don’t pay for stamps or check printing. The Texaco station near my local Costco has very low prices because they have to compete with Costco, but Costco takes only debit and American Express, and Texaco takes my card, so it generally works out cheaper for me than Costco, with shorter lines.

By: Kosmo @ The Casual Observer

Kosmo @ The Casual Observer — Tue, 07 Jul 2009 13:11:49 +0000

Yeah, I’m a big fan of free money, too

We get 5% back on gas, 2% back on weekend purchases, and 1% back on everything else. We reap hundreds a year in cash rewards and never pay a penny in interest.

By: Madame X

Madame X — Mon, 06 Jul 2009 19:49:18 +0000

Not all gas stations here (in NYC) have different prices for cash and credit. Some charge the same, so you have to look closely before you fill up! It’s so annoying when you think you’re getting a lower price and then discover the small print…

By: Patrick

Patrick — Mon, 06 Jul 2009 17:43:19 +0000

Cash can be a great bargaining tool in other countries, but may not apply as much in America. In smaller stores or for big purchases, cash can save you some money and can be used as a bargaining chip. In most major retail stores, they don’t seem to care whether or not you use a credit card.

By: Richard

Richard — Mon, 06 Jul 2009 16:41:18 +0000

Let me put this into perspective here. Say you pay $100 a month in gas. With cash, I’d have paid $1,200 by year-end. Using a credit card that gives you 5% back, I’d have actually paid $1,140 — saving $60.

This, of course ASSUMES that you do NOT carry a balance. If you do, that’s a whole different discussion.

You’re right in terms on “simplification” I suppose. Yes, at the end of a cash transaction, that’s it. But to be honest, it really doesn’t take too much to simply click a few buttons to pay off your credit card at the end of each billing cycle.

In terms of debt reduction, however, I put to you that maximizing the use of cashback will better help in that regard. For instance, just this example saved me $60 this year. That’s $60 that can now go towards my house, or my car, or student loan, or whatever. And what about that 5% on groceries? At the drugstore? Movies? Bookstores? EVERYTHING?

Not that I know of cards that will give you 5% back on EVERYTHING, but the point remains… cashback is in essence, FREE money, *ASSUMING you do not carry a balance*. Free money is better than no free money when it comes to debt reduction, I say.

By: Kevin at OutOfYourRut

Kevin at OutOfYourRut — Mon, 06 Jul 2009 15:26:14 +0000

I have to fully agree with Jim here, cash is the way to go. At a minimum, when you pay cash the deal is done and you get on with your life. With credit, you drive off with the purchase, but you get the tail end of the transaction (your ACTUAL payment) 30 days later. If you pay off your balances in full each month, that’s virtually as good as cash, but statistically, 70% of cardholders carry a balance, which means interest.

From a pure life simplification/debt reduction standpoint, cash is always better.