Policy wonk proposes practically eliminating cash

[gjohnsoniv]

23 minutes ago, 56FordGuy said:

That's how we've bought all of our vehicles. Dealer wasn't quite sure exactly what to do when I bought my '01 F-350 a few years ago with an envelope full of $100s. 

I've always wanted to do that.  One day.

[gregintenn]

14 hours ago, DaveTN said:

True, but it’s also true you can’t stop payment on cash if you need to.

Do you get a 3% discount at the grocery store when you pay cash? I don’t. As a matter of fact the only place I personally have been offered a discount for cash is buying guns on-line.

No, that would be the time to use cash.

I swipe my card and roll; they probably take longer giving you change.  

 

No I’m stating it; but that doesn’t mean there is anything wrong with it. Some people won’t buy a gun from an FFL because they don’t want the sale recorded; nothing wrong with that. I’ve bought guns and paid cash because I didn’t want to deal with questions from the wife; nothing wrong with that either.

 

I’m not saying there is anything wrong with using cash. I’m just saying I choose to get the kickbacks from the credit card companies. I pay my credit card bill when it comes due; so it’s free money.

Have you gotten wealthy off your credit card kickbacks?

There's a recent phenomenon called "identity theft" that doesn't affect cash buyers.

[A.J. Holst]

How in the world would we pay the Iranians if we went cashless?

Having worked in the lending money box for 20+ years, cc's can be scary good and scary bad.

Imo, we all pay 1%-3% more for goods and services to pay the merchants trans fee, whether credit or cash.

Debit has a lower merchant fee than credit.

Sears makes more income from finance charges than selling merchandise.

Watch your high credits vs. balance vs. total revolving usage, perfect credit with high utilization and low credit availability adversely impacts your credit score.

I'm a cash guy, I spend less and experience fewer impulse buys.

 

Edited August 28, 2016 by Gotthegoods

[GlockSpock]

Let me first say that I am neither anti-plastic nor anti-cash, each have their pro's and cons. That's why any smart person carries both of them daily.

No, nobody ever got rich off of credit card kickbacks. Guess what? You could say the same off the people that are cash only; Being cash only in and of itself is not making them rich.

 

Now, I for one had a credit card number stolen one time. Ironically enough, someone used my Discover for a membership at Christianmingle.com. Ironic huh? Know how I found out? Discover called me a few moments after it happened and asked me if that was me. I told them no. They immediately canceled the card and overnighted me another one. I literally had it within roughly 24 hours. The only real "hassle" was that I had to retype my numbers in all of my online retailers. No big deal.

I just received an email the other day stating that I have received roughly $350 so far this year from Discover in the form of cash back. It also said that I have paid $0.00 in interest (ever). Now, I myself can manage to put spending on a card and pay it off each month. However, here is how credit cards work. Sure, they give some people cash back. I calculated my cashback and divided it over my spending, I am getting about an average of 4.5% cashback. Sure, someone may wonder how it works since I have "made" money off Discover. Well, typically Discover gives 1% cashback with some revolving deals at categories at 5% or even higher. Most of the time though you get 1% unless you really, really plan to do better (I try). Well, Discover is probably making 3% off retailers for simply running the transaction. Sure, I see that this theoretically causes prices to be higher, but until a way to purchase things off the internet without having any fees for the retailer is introduced, credit cards are currently about the best. Now, I have a quite large credit limit as I am sure many of you do. What about the poor sap that racks up $15,000 on their Discover? They are paying about 20% interest yearly and they will not pay it off by the end of the year. So their debt is perpetual and Discover makes a lot of money off them. So one of those people that Discover makes bank off of offsets many dozens of people like me who can use a card responsibly. Discover is not loosing money, but if you do it right you can make money using a credit card. I have heard statistics the plastic causes people to spend more money, that is likely a psychological truth. Another fine aspect of plastic is that it allows you to have a large amount at the ready if needed.

Now, cash. It also has pros and cons. Yes it is "anonymous" in a sense. In a sense, you are part of the product when you use a card everywhere. Discover and their competition probably make a pretty penny selling that sort of advertising information to various organizations. Cash you can avoid this. However, did you know that retailers can now use cameras as well as Wi-Fi to create a profile for you against your will? Cameras tracking where you walk coupled with Wi-Fi location tracking while in the store, computers can build a database of how long you stay in each section. When you go to checkout it can still be logged to your profile. Cash is anonymous? Sometimes. For those advocating that cash is more secure than plastic, identity theft, etc. Cash can be stolen. As stated in the paragraph above, generally you are not responsible for orders you did not make on plastic. A buddy was saving lots of money in a shoebox stored under his bed. It seemed secure. A tornado came and made that box disappear. I do not believe he got that money back from insurance. Carrying a large amount of cash on person/in vehicle/etc can make you a target of thieves. Again, very difficult to get that physical money back. Now, I'm not against cash. I think that a physical currency for commerce is nearly a right and it will always be in place whether legal or not. Of course it has also been stated that cash is more "reliable" than plastic. Sometimes that is true. Ever been in a city where the telecom system is down and not a single retailer in an area can accept plastic? It sucks. That's why smart people carry a bit of cash along with their cards.

Again, both are great, both have cons as well. I don't see why it has to be one or the other. Just different methods for different times. If someone isn't responsible with budgeting and money management, staying primarily cash based is better. If you can responsibly use a credit card, there are many rewards to be reaped. Cash isn't always as anonymous as people might think but that field will only get worse as time passes.

[jpx2rk]

Credit card companies are making all their money/profits on those people who use their plastic way too much, buy too much because of the "I'll pay for it next month or over a couple months", and it never happens.  That $50 purchase on the plastic turns out to be about a $75-100 purchase after adding the interest they paid, along with all the other $50 purchases they made on the plastic.  CC companies also make $$ on those late charges, ever notice that your payment due date is probably due on a Saturday or Sunday now.  Take a look at your statement.  They don't process payments on weekends.  

I sold a car in June, and the guy said he would bring a cashiers check and I knew the bank he uses well, but requested cash instead as I did not know him other than meeting him when he test drove the car.  He brought cash w/o issue.  Met the guy at a local bank for safety reasons, did the deal, and we parted ways.

Cash will never go away, some people don't believe in credit cards because they know they will get into financial trouble (debt) and can't pay for all of those "spur of the moment" purchases, or have already traveled down that road with a CC and are working their way out of it, or went thru bankruptcy because of a CC or multiple CC's, and can't get a CC now.

[Mark A]

Getting rid of cash is the wet dream of every banker and politician out there...

[GhostDog]

Why help anyone track everything bought and sold? Will they tax air next? Cash is a good thing.

At the end of the day, it doesn't matter what we think. If the guy who wrote the article is right about corruption, terrorism, tax evasion, ect, who really thinks that ANYONE in gov't is going to seriously try to get rid of cash? Doing that might put most of them out of business.

[Grayfox54]

When I was much younger I got myself into debt problems because of my credit cards. That is a very common story these days. I don't know how many times I've waited in line while the person in front of me tried multiple credit cards to find one that had enough on it to make their purchase.  I hate to think how many people are struggling each month just to make their minimum payment. Once you're that deep, its almost impossible  to get out. 

Debit cards are almost as bad. Sometimes companies hold the withdrawal for days or weeks before posting them with the bank. You think you have money and suddenly, OOPS, you're overdrawn! 

I decided years ago that with the exception of large purchases that require financing, if I couldn't pay cash for it, either I don't need it or I'll just have to save up to buy whatever it is. This philosophy has served me well and today I am out of debt. My home and vehicles are paid for. I have only the usual monthly bills such as utilities, phone,  groceries and such.

I do have one credit card that is used mostly for on-line purchases. I'm careful to limit my spending on it to an amount that I can pay off at the end of the month. BTW: my credit card number has been stolen twice. Both times it was caught and didn't cost me anything but the inconvenience. But its still a PITA. 

Electronic money is too easy. You never see it, many don't keep up with it as they should and lenders make a lot of money on interest and overdraft fees. 

Besides, in times of power outages, storms or natural disasters, people with cash can get what they need. 

 

 

[Hershmeister]

So this week the wsj published a responsive editorial to this article. It is stellar




"As for the cam­paign for zero cash in the ser­vice of neg­a­tive in­ter­est rates, Mr. Ro­goff’s brief is best seen not as de­tached sci­en­tific analy­sis but as a kind of left-wing crotchet. Strip away the tech­ni­cal pre­tense and what you have is pol­i­tics. The au­thor wants the gov­ern­ment to con­trol your money. It’s as sim­ple as that."


The End of the Benjamins

http://www.wsj.com/articles/hostage-to-a-bull-market-1473456611


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[btq96r]

I think something to consider is the generational aspect of this debate.  Right now we still have a sizeable enough population that remembers the days of mostly cash purchases, balancing a checkbook with a pen or pencil, credit cards needing that hard swipe to get the carbon copy filled out...basically a different consumer experience than we have today.  In 25 years, the overwhelming majority will have been using debit cards and online banking from the beginning, with cash being a secondary means of transaction. 

Going to a more or less cashless economy by then wouldn't sound so extreme.

[No_0ne]

On 8/27/2016 at 4:13 PM, DaveTN said:

I don’t know why anyone would want to use cash, unless it’s something you don’t want a record of, when credit card companies give you cash back so you pay less than the guys paying cash.

The flaw in your logic is assuming that everyone has a credit card.  I happen to know at least one person who has never bothered with one of the things ...