Comments on: The Hidden Costs of Cash http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html personal finance blog with anecdotes, advice and commentary. Sun, 08 Nov 2009 14:46:17 -0500 http://wordpress.org/?v=2.8.5 hourly 1 By: John http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-326652 John Sun, 30 Aug 2009 17:29:36 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-326652 Jared's argument is sound on the surface, but my how we so easily discount historical precedence here. BEFORE THERE WERE CREDIT CARDS, merchants used to balance their drawers every night, everywhere across the nation. This was (and still is) the cost of doing business. To infer that this cost is something new or added because of cash payers is grotesquely untrue. It is a fact, and it it is true, that cash payers subsidize credit card users. Only modern-day computing makes reconciliation easier for credit card transactions; however, it should not be considered a new profit center. Of course, some bean counters, somewhere, will see it that way. Jared’s argument is sound on the surface, but my how we so easily discount historical precedence here. BEFORE THERE WERE CREDIT CARDS, merchants used to balance their drawers every night, everywhere across the nation. This was (and still is) the cost of doing business. To infer that this cost is something new or added because of cash payers is grotesquely untrue. It is a fact, and it it is true, that cash payers subsidize credit card users. Only modern-day computing makes reconciliation easier for credit card transactions; however, it should not be considered a new profit center. Of course, some bean counters, somewhere, will see it that way.

]]> By: Amber http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226692 Amber Sun, 06 Apr 2008 05:36:44 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226692 I do know there are retailers (McDonalds, Arco, Carl's Jr for example) that will automatically charge a flat fee for using a card and others that are more local to me that have a minimum purchase on a card or you get charged an extra fee. That aside, the one thing I will say about my personal preference for using Cash over a Card for purchases is that I know I am not at a place right now where I can honestly say I will pay off the credit card bill at the end of the month. So it actually would cost me more (in terms of interest) based on your original post. It definitely is something to consider but the way I see it, you're screwed any way you slice it. I do know there are retailers (McDonalds, Arco, Carl’s Jr for example) that will automatically charge a flat fee for using a card and others that are more local to me that have a minimum purchase on a card or you get charged an extra fee.

That aside, the one thing I will say about my personal preference for using Cash over a Card for purchases is that I know I am not at a place right now where I can honestly say I will pay off the credit card bill at the end of the month. So it actually would cost me more (in terms of interest) based on your original post. It definitely is something to consider but the way I see it, you’re screwed any way you slice it.

]]> By: Zook http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226292 Zook Wed, 02 Apr 2008 17:34:55 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226292 Zach- Simply put....Switch your bank/card. Zach-

Simply put….Switch your bank/card.

]]> By: Zach http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226252 Zach Wed, 02 Apr 2008 05:39:36 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226252 err. . . I'm always charged .75$ for card transactions. err. . . I’m always charged .75$ for card transactions.

]]> By: AJC @ 7million7years http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226251 AJC @ 7million7years Wed, 02 Apr 2008 05:36:20 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226251 In Australia, retailers have the option of charging MORE for credit cards! Of course, if all consumers moved to dredit cards to get the 'reduced fee', prices would go upm (on average) ANOTHER 2%. But, your point is well taken ... thanks for some 'unconventional wisdom' - the best kind ;) In Australia, retailers have the option of charging MORE for credit cards!

Of course, if all consumers moved to dredit cards to get the ‘reduced fee’, prices would go upm (on average) ANOTHER 2%.

But, your point is well taken … thanks for some ‘unconventional wisdom’ – the best kind ;)

]]> By: jim http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226208 jim Tue, 01 Apr 2008 20:51:32 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226208 Jared, Will: Those are certainly valid points, probably outlined in painstaking detail in credit card merchant processing brochures! I didn't consider the cost of processing additional cash, just the fees involved, so thank you for bringing it up. I've never reconciled a cash register before (the places I've worked were so small that the owner only trusted himself to do that) so I didn't take that into consideration. Jared, Will: Those are certainly valid points, probably outlined in painstaking detail in credit card merchant processing brochures! I didn’t consider the cost of processing additional cash, just the fees involved, so thank you for bringing it up. I’ve never reconciled a cash register before (the places I’ve worked were so small that the owner only trusted himself to do that) so I didn’t take that into consideration.

]]> By: Will http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226207 Will Tue, 01 Apr 2008 20:48:00 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226207 I have to side with Jared on this one. I've worked in the credit card division of a bank and one of the biggest benefits of plastic transactions for merchants is the streamlining of closing at the end of the day. He summed it up brilliantly so I don't have anything to add to that. On the other side, I really think that the extra couple % points a cash user pays is more than set off by his avoiding the overspending that (more often than not) occurs with plastic. I have to side with Jared on this one. I’ve worked in the credit card division of a bank and one of the biggest benefits of plastic transactions for merchants is the streamlining of closing at the end of the day. He summed it up brilliantly so I don’t have anything to add to that.

On the other side, I really think that the extra couple % points a cash user pays is more than set off by his avoiding the overspending that (more often than not) occurs with plastic.

]]> By: Saving Freak http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226204 Saving Freak Tue, 01 Apr 2008 20:12:49 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226204 McDonald's saw a 17% increase in spending on plastic transaction instead of cash. The temptation is much larger to spend more when you don't feel the pain of the cash leaving your hand. Cash should still be king and credit a tool. McDonald’s saw a 17% increase in spending on plastic transaction instead of cash. The temptation is much larger to spend more when you don’t feel the pain of the cash leaving your hand. Cash should still be king and credit a tool.

]]> By: Garrett http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226200 Garrett Tue, 01 Apr 2008 19:08:10 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226200 I thought the fees were lower than 3-4% -- so I looked it up. Wikipedia has them from 1-6% but unfaircreditcardfees.com lists them at slightly less than 2%. I thought the fees were lower than 3-4% — so I looked it up. Wikipedia has them from 1-6% but unfaircreditcardfees.com lists them at slightly less than 2%.

]]> By: Jared Rice http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226195 Jared Rice Tue, 01 Apr 2008 18:41:44 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226195 I'm not sure I agree with this line of thinking. The concept is sound at the surface, but it presumes that the cost of handling cash is $0. As someone who used to handle cash for a living (running the office of a grocery store), this is DEFINATELY not the case. For every drawer I closed each night (with 3-6 drawers to close in a given night, this was a small grocery store), the credit cards took ~1 minute to reconcile - print up tally sheet from the credit card machine, compare it to the tally on the register (almost NEVER different), done. Cash (and checks), on the other hand, needed to be hand counted by the cashier first (before they clocked out), then by myself, and reconciled against the register. Then, at the end of the night, a cash deposit needed to be prepped, myself again counting all of the cash and checks to be deposited, and handing it all to the night manager to re-count. All of this labor wasn't free. Then the entire office was reconsiled in the morning (i.e. all cash on hand is counted). All of this is labor that, while not crazy high pay, isn't something you trust to minimum wage minions. I don't know how the cost compares to that of credit card fees, but the idea that handling cash is free for merchants is silly. I’m not sure I agree with this line of thinking. The concept is sound at the surface, but it presumes that the cost of handling cash is $0. As someone who used to handle cash for a living (running the office of a grocery store), this is DEFINATELY not the case. For every drawer I closed each night (with 3-6 drawers to close in a given night, this was a small grocery store), the credit cards took ~1 minute to reconcile – print up tally sheet from the credit card machine, compare it to the tally on the register (almost NEVER different), done. Cash (and checks), on the other hand, needed to be hand counted by the cashier first (before they clocked out), then by myself, and reconciled against the register. Then, at the end of the night, a cash deposit needed to be prepped, myself again counting all of the cash and checks to be deposited, and handing it all to the night manager to re-count. All of this labor wasn’t free. Then the entire office was reconsiled in the morning (i.e. all cash on hand is counted). All of this is labor that, while not crazy high pay, isn’t something you trust to minimum wage minions. I don’t know how the cost compares to that of credit card fees, but the idea that handling cash is free for merchants is silly.

]]> By: Jay http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html/comment-page-1#comment-226193 Jay Tue, 01 Apr 2008 18:16:42 +0000 http://www.bargaineering.com/articles/the-hidden-costs-of-cash.html#comment-226193 Interesting post. But I have to take issue with the idea of using a 1% cashback card to recoup some of the costs. Studies have shown that most consumers spend more when using plastic; some up to 20% more than if they had paid with cash. Great blog! I'll be back often. Jay Interesting post. But I have to take issue with the idea of using a 1% cashback card to recoup some of the costs. Studies have shown that most consumers spend more when using plastic; some up to 20% more than if they had paid with cash.
Great blog! I’ll be back often.
Jay

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