Cash or card?

[black_son_of_gray]

@AnalyticalEngine - I haven't had a credit card in maybe a decade, and I have zero interest in getting one. Weirdos like me do exist! I do use online bill pay for insurance, cell phone, etc., as I dislike writing checks all the time. I have a single debit card which I occasionally use for purchases I have to make online. Otherwise, it's paper cash at physical places. Apparently I'm one of those sentimental dreamers who likes to shop local without a mega-corporation intermediary.

[Peanut]

No phone option? Everyone I see outside seems to use applepay or similar.

For a luddite like myself, both cash and card. Unlike the conventional wisdom I spend more freely when it's cash though, because I know I'll see the charge again on card purchases. Cards are so ubiquitous I feel like I'm imposing on clerks when I use cash. I like the idea of using cash for all local businesses, hadn't quite worked that out systematically for myself.

Never used the airline cards, wasn't worth it for me. Used to get cash back, but have had an amazon card for many years now. We spend more through the free merch points than through normal purchasing I think, but not a whole lot either way. I have liked it because it has been a license to buy weird stuff I normally wouldn't 'for free.' Bluelight filter, emf detector, etc. Other than their stock price many things about amazon depress me though, so I may switch it up this year.

[Sclass]

I reserve cash for restaurants where I’m a regular. It gives the owner a little extra if he doesn’t have to pay merchant fees on a credit card transaction. Food service is tough and I like to support my favorite haunts in every way I can or they may disappear. This is a place where everyone knows me by name and I don’t even bother ordering because they know what we eat and drink. “The usual.”

The rest of the proprietors that I DGAS about get the rapid rewards card! I think somebody here pointed out that we are basically paying for these cards in all pricing nowadays so we are actually losing a few percent by paying cash.

What are muggers taking from people now? Cards? Phones? It seems like nobody I know carries much cash anymore. It scares me to think a modern mugger probably wants to take me on an ATM tour to get his moneys worth.

Peet's coffee uses the pay by app that I fill using Costco gift cards that are purchased at 20% off. Then they give me discounts, bonus drinks and beans based on my loyalty. Makes me feel guilty.

[horsewoman]

CCs are not really a thing here in Germany. They get not even accepted in a lot of stores. Most people here use EC cards, which are more like debit cards I suppose.

If not for a holiday in the States plus the fact that my bank provides a CC without extra fees I would not even own one.

I like to pay with cash and would be extremely opposed to a cash-less future, even though this seems to be a pretty likely scenario. We usually spend not more than 500 Euros a month for groceries, household stuff, eating out, general local shopping ect. and do so with cash mostly. I tend to spend more when I use my card. Handing over cash is more painful than putting a card on a device.

[CS]

I use cash for nearly everything I can - certainly most in person purchases.

It's a combination of clean financial records (I have budget software I use, I don't want or need a mess ton of receipts and credit card statements to go through), wanting to save the merchants money ("but everyone else does it" earns a snort from from me), and lastly avoiding the hassle of getting my info stolen. I NEVER use a cc at a gas pump for example these days.

It's also a bit stealth. When I come in to pay cash I get the look like I'm poor. Fine by me.

Personally I support abolishing the rules that merchants can't charge more for credit cards. I'm all for tacking a 3% fee on all credit card transactions. It might actually push people away from relying on them so much.

Also, in general, I think credit card companies are the worst sort of evil that prey on poor people. I use them because yeah, it's hard to move in this society without them, at least online. I will admit they provide a layer of consumer protection in some cases.

Edit:
A down side of cash, besides being dirty (literally), is that it often reeks. People get all their fragrances all over it. Yuck. Yuck. Yuck. I have a nose like a bloodhound, which makes me wish perfumes and scented laundry detergents were illegal.

[GandK]

This is becoming a bigger deal every year. More cities and states are passing laws making it illegal for bricks-and-mortar stores to reject cash payments, on the grounds that most people who are cash only are immigrants and people of color. That's great for everybody. But the biggest issues I have with going all digital are hacking/tracking concerns, and the potential imposition of serious negative interest rates once no one can escape a forced digital environment. The current environment is already pro-debt and punishes savers... can you imagine how much worse it would get if the Fed's money fairies could literally squeeze us all into spending every dime, "for growth" and because it's "patriotic" to do so? *dons tinfoil hat*

[Dave]

Most of the time, I use a 2% cash-back credit card that allows me to deposit the cash directly into a brokerage account. While this could be essentially accomplished with an additional step on many cards, I enjoy the direct link.

About a year ago we started playing the sign-on bonus game a bit. For ultra-low spenders, the benefits are obviously limited. But, as many others have said above, if you are able to batch up some purchases you can get a fair bit of value here.

For sake of example, I'll expand.

My wife and I both got an Southwest credit card that required $1k of spending in a 3 month period to earn 40,000 points that redeem in flight credit at about a 1.5% rate. In conjunction with our move to Hawaii and batched other things, we were able to quite easily hit this without extra spending, resulting in a combined $1,200 of flight credit we have already tapped into. The fees were $138 combined, bringing this to a net $1,062. Fees were waved for the second year based off a phone call.

Then, after we moved, my wife started work as an independent contractor. We got her the business card with the same airline and with a new computer/phone/insurance/license/education batched expenditures, we hit the limit required to earn 60,000 points, or another $900 of flight credit. The fees were $99, bringing this to a net $801. Fees will be waived for the second year or we cancel the card. Admittedly, some of the purchases here were accelerated, but as noted in the following point even if this was a total wash on this card's stand-alone basis (which is definitely not true), it worked out well.

While doing this, we were able to hit a high-end rewards program (the Southwest Companion Pass) and now I fly free (except immaterial taxes/fees) every time she flies. This was in effect for half of 2019 and all of 2020. Normally for us this wouldn't be useful, but given that we are in Hawaii now and doing some elevated travelling, this has/will result in several thousand dollars saved.

Along the way, we started using Top Cash Back on the purchases we could here, and have earned several hundred dollars from this as well.

Separately, we got another credit card that had 0% international fee for an international trip, and were able to earn another net $150 from hitting its measly spending requirement.

All in all, I expect these efforts to save us meaningfully more than $4K. On the front end it took some time to read and get comfortable with how all of this worked, but I don't think we spent more than 5 hours total of incremental time to do all of this. Even if it took 10 extra hours, we're talking about $400/hour tax free.

Prior to all this, I was sort of reluctant to play this game. I have a friend quite involved in this sort of thing, and it really is incredible what some people are able to do - some people make a living off of gaming/working various systems. I've learned a lot. The big thing I've learned is that 1) some of the spending limits are pretty easy to hit and can add several hundred $ of rewards benefits, which as ClassicLiberal said is not immaterial to those on an ERE budget and 2) the big rewards in this game come from stacking various tactics on top of each other (personal Southwest card + business card = lots of points -> Companion Pass worth a ton, with extra cash back from shopping through Top Cash Back). Learning 1 is available to anyone, Learning 2 is situationally useful.

[CS]

@Gandk

That is great on the laws. It makes it even more personally important to me to pay cash. The tracking is bothersome - from the companies, the fed, the hackers, google. All of it. Instead of thinking of how much $ is gained, it is good to think of the high price of lost privacy and freedom.

The credit thing also introduces a callousness towards fellow humans that I think is not helpful for our society. It's rather hidden, but it's there nonetheless. The 2% back (and the card I use the most does have this so I am just as guilty) comes on the backs on the poor. How can this be reconciled? The easiest way to justify this is to think "if they were better with their money, they wouldn't pay interest in their cards" (we all know the reality is if no one paid interest on their cards then the companies couldn't give any money back). Whether that thinking is openly acknowledged or not, I assert it is there to some degree.

The truth is being poor is dang expense. Yes, it is possible to reduce spending and save money even on low wages, but that takes education and the room and time for the brain to think and learn - something in short supply when working a lot to pay basic bills. Not everyone is blessed with high IQ and a handsome push into adult life, which was my own start.

I'd rather pay a little more if it helps others.

[Tyler9000]

IMO it's fine to question the insanely high interest rates on cards for people who don't pay them off monthly, but I personally don't agree with labeling the cash rewards as coming "on the backs of the poor". They are incentives to encourage more people to sign up (increasing the size of the pie) and are not a zero-sum game coming solely at the expense of someone else. Economically speaking, an effective incentive reduces the interest rate required to generate the same profit.

I primarily use my Fidelity CC for as much as possible. It pays 2% cash back on everything, which is automatically deposited into my brokerage account with no action required on my part. Financially, it's a simple way to maximize the effectiveness of the resources I'm given. The small amount of cash I keep with me is mostly for the dive bar near my house, the occasional Craigslist purchase, or for contributing to a group lunch tab without signing up for something like Venmo.

[Scott 2]

How often are card users having their number stolen? I'd guess every 3-5 years for me. It's a time hassle, but the credit card companies have always eaten the loss.

I've largely given up on protecting my privacy from the corporate overlords. The opportunity cost is too high. I also know they have ways of tracking beyond the card, especially online. The transactions I could execute card free aren't very interesting.

I consider the impact of a no card life on my credit score. Even if you are cash only, institutions use that data. It is impossible to avoid entirely. I had to unfreeze my credit to buy a car in cash last year.

I stopped playing the card sign up and swap games. My reasoning is it's a trade of my precious time for money, with zero value add to society. As a salaried employee, this only adds to my stress. It's not like I'd tell my boss, "taking an unpaid day off, Chase hooked me up with a sick bonus".

[George the original one]

I had to unfreeze my credit to buy a car in cash last year.

That is just dealerships ("stealerships") being assholes.

[Scott 2]

Sure, but at the level I was dealing with, hands were tied.

For my commodity car needs, the large high volume dealership had the best prices. By choosing to engage in the ease of their system, my best path was to trigger the unlock, pass the check, and get a car.

Maybe I could have escalated 2-3 levels across departments to get that waived. It would have been a huge pain. The people dealing at my level of transaction really weren't equipped to do anything but follow their scripts.

With the credit score - they let me take a car based on my signature and a post dated check. My trade in was accepted on a verbal promise to bring the title later.

Increasingly, that data is becoming the keys to special treatment. I'm gonna make mine look good.

Were I feeling especially cynical, I might keep my alcohol and fast food purchases to cash. I don't think that world is here today, but it wouldn't surprise me in the future. I'm not sure I can be bothered though. I'd never remember to turn the location services on my phone off before walking the liquor aisle, for instance.

[GandK]

More on why I favor cash in hand as a hedge against negative interest rates. This isn't happening in the U.S. yet, or to us plebes, but I fear it will:

The rich have had enough of negative interest rates. Some are pulling cash out of Swiss banks.

[SallyJo]

In the 80's I would take out some cash each month to pay for everything (not rent, though, just groceries, food, transit, clothing, etc). When debit and credit cards and online shopping became ubiquitous over time I started using them- just to find that I wasn't saving much of my income anymore, but was hip deep in possessions. Now I am back to my old habit of pulling out a sum of cash each month. I still only take out about the same amount per month, like I did back then. By employing the ideas from the ERE book, I've reduced my spending right down to that of the 80's. Great book for rethinking things.

[The Old Man]

… cash … It gives the owner a little extra if he doesn’t have to pay merchant fees on a credit card transaction.

Remember that banks charge cash handling fees on businesses. Also, remember that cash has intrinsic security risks.

When my father managed a store, several times a year he would get phone calls in the middle of the night that the store had been broken into. The burglars would go in through the roof or the side and blow open the safe. One time in a daylight robbery my father had a gun put to his head and in the stress of the situation fumbled the safe combination – almost got shot. Store managers and their families have also been known to have been kidnapped. For this reason, we had to practice a certain amount of OPSEC and that included me as a child.

TL/DR You are doing no business any favors by using cash.

It scares me to think a modern mugger probably wants to take me on an ATM tour to get his moneys worth.

This does happen. There is also the concept of “mug” money. Having gone through the trouble of mugging you, they want something for their trouble. If you have no money, then that makes them mad and you run the risk of being knifed or worse.

[ZAFCorrection]

The internet is telling me that cash handling fees are generally less than transaction fees, but that plus the security issue hopefully can wash out the morality angle on payment processing methods.

[tonyedgecombe]

This does happen. There is also the concept of “mug” money. Having gone through the trouble of mugging you, they want something for their trouble. If you have no money, then that makes them mad and you run the risk of being knifed or worse.

If I thought I was at risk of this I might have a secondary wallet and possibly account I wouldn't be worried about losing. Here's my wallet, would you like my Nokia 1280 as well?

[black_son_of_gray]

Wrt "mug" money, it's recently dawned on me (after a decade, yeah I'm slow) that there really isn't a point in carrying around a credit/debit card of any kind with me on most of my city excursions. Most of what I do is on foot and within 2 miles of my house, so now I basically just take $20 or $30 dollars in my wallet. The idea being that if I'm mugged (not that I think it's likely, but there are a lot of tweakers on Bay Area streets these days*), I can hopefully just empty it out and hand the cash to them, showing them that I don't have a card or anything else of value in my wallet (my Safeway card??), and then not have to go through the hassle of cancelling cards/getting new IDs, etc. I wouldn't bother to do this if I weren't living in a dense, high-traffic area, though.

*Example: a few months ago I was strolling through the neighborhood when a "twitchy" guy came up to me in an urgent manner and said "hey dude, do you have a razor blade?!" I said that no, I'm very sorry but I'm not packing a razor blade on my person (is this a new thing with EDC or something?) and he shot back down the street, I guess to find someone else.