ICFE eNEWS #11-33 - September 28th 2011
Make it cash for me in the cash versus credit question.
by Paul Richard - ICFE President
San Diego, CA - A growing number of merchants won't accept cash
anymore, including many airlines, which insist you pay by credit card if
you want to buy a drink or a sandwich on board. There are also news
reports that the U.S. Treasury is printing fewer dollars, as American
consumers move towards an all-plastic economy. It is good news for the
banks, card companies and other lenders. To add to the cost of banking
is the threat of a new one percent transaction tax on all banking
Cash is this writer's preferred method of doing business. No credit
cards, no travel cards, no charge accounts and here are some reasons
- Spend less using cash. Most people are simply willing to spend more
when they use credit cards than they do when they use cash. The
day-to-day cash spending rates drop. There are far fewer impulse
purchases too, because if there is no cash available there will be no
- Cash makes budgeting easy. Draw out a certain amount of cash once
a week and budgeting becomes automatic. One thing we all do when
spending cash, we count how much is left over after a purchase. Hardly
any credit card buyers check their credit available after their
- Reduce indebtedness. Credit cards were originally designed to be
used for convenience, however a growing number of card holders now use
them to accumulate debt. Using a card for convenience means paying the
account in full at the end of the accounting period. Using the cards
for debt means consumers will pay a lot more in the end because credit
card interest rates are higher than most loans.
- Cash makes me think about what I spend and why. Brett Arends, a
writer for Smart Money magazine, remembers back when he got his first
job, he writes that he started calculating how much everything he spent
cost in terms of hours worked. That new CD cost two hours of his time,
and so on. It was a good discipline.
- Identity theft potential is minimized. Many people worry about
handing out a credit card or details every time they make a purchase
because of the prevalence of credit and identity thieves. Using cash
cuts down on the risk and increases privacy.
- Cash helps local people. The cash spent at local merchants and their
suppliers is keeping some fellow citizens in work. On the contrary
with credit cards, the interest and other fees are helping finance bank
executives, their marketing teams and call centers overseas.
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President - Executive Director
Institute of Consumer Financial Education (ICFE)
ICFE - Institute of Consumer Financial Education -