Almost cashless society?

[Walt34]

DW went shopping at the outlet mall and bought an inexpensive clothing item with cash, a bit less than $20. The cashier remarked that it was the first cash transaction of the day, this at 3:00 PM.

Does that strike anyone as unusual?

DW also noticed a lot of the stores are shuttered.

 

[crazy connie]

I wonder how many debit/cc transactions had been processed? Some retail shops are only doing a few a day except on weekends.

 

[FUEGO]

DW went shopping at the outlet mall and bought an inexpensive clothing item with cash, a bit less than $20. The cashier remarked that it was the first cash transaction of the day, this at 3:00 PM.

Does that strike anyone as unusual?

No. I hardly ever transact retail purchases in cash. Nor do many of my peers. In fact, I would bet 80% of my peers had less than $20 on them at the moment. Peers being well educated professionals in their 20's and early 30's. I don't know how many times I have heard "I don't care where we go as long as they take cards since I have no cash".

Credit cards are easy. Change is annoying. Credit cards are more accurate - less risk for incorrect change. Many times CC's are faster than counting out proper quantity of cash, then the cashier making change and counting it out to you. They also pay me 2-4% for buying stuff that I would have bought anyway. And at the end of the year, my purchases are virtually all recorded on 12 convenient monthly statements that can be sucked into excel if I want to do any analysis on my spending patterns.

It does feel a little weird sometimes paying for stuff that costs $2-4 dollars with a CC (fast food, rx at walmart, photos, etc).

 

[FIREd]

I almost never use cash. I don't even carry cash in my wallet. And yep, I am an educated professional in my 30's.

 

[bssc]

I have some cash on me. I charged stuff for the group and they paid me back in cash. Otherwise I charge everything.

 

[aaronc879]

I use cash for everything that isn't directly taken from my checking account. Almost everyone I know uses cash for almost everything. Those that use a credit card are the ones that are living above their means. I know that's not always the case but in my experience, it is.

 

[mickeyd]

I tap the ATM about once a quarter for $40 or so. 99.9% of what we spend $ on is with a CC.

 

[DangerMouse]

Anything over $5 I charge. I get a couple of hundred of cash from the ATM and it normally lasts weeks.

 

[dex]

I almost never use cash. I don't even carry cash in my wallet. And yep, I am an educated professional in my 30's.

Although a person has be educated in general or in a particular field they may not know the true cost of cc transactions.

The True Cost of Credit - Freakonomics Blog - NYTimes.com
The True Cost of Credit | What does your card cost?

We all are paying a cost for the use of cc.

If merchants were allowed to charge less for paying cash we would be better off (some/most states prohibit this.)
The True Cost of Credit | Your Credit Card Costs (400927)

 

[saluki9]

No. I hardly ever transact retail purchases in cash. Nor do many of my peers. In fact, I would bet 80% of my peers had less than $20 on them at the moment. Peers being well educated professionals in their 20's and early 30's. I don't know how many times I have heard "I don't care where we go as long as they take cards since I have no cash".

I'm in the same age bracket and I find this annoying. I too charge most of my purchases, but I always keep at least $100 in cash on me.

I hate going out with people who can't even buy a beer unless they can charge it.

 

[FUEGO]

Those that use a credit card are the ones that are living above their means. I know that's not always the case but in my experience, it is.

Could be a difference in the demographics of your peers? I know of some of my in laws that don't don't have high income jobs and pay cash for everything because they kept getting into credit card debt. Paying with plastic is obviously something that should not be done if one can't control spending and can't internalize the fact that they will eventually have to pay off the charges (preferably monthly to avoid interest).

I do worry just a little about the perception of charging stuff for a few bucks. Maybe people will think I'm destitute and can't afford what I'm buying so I pay with plastic? But then I get over that apprehension and swipe the card.

Maybe the recent economic crisis and frugality coming into style have changed things since I see a lot less plastic usage at the checkouts now.

 

[Poundkey]

The title to your post got my attention. I had an E-mail from my son hardly an hour ago......something about a transaction between VG and his bank. In it he said "Money is just numbers in computers now."

 

[FUEGO]

I'm in the same age bracket and I find this annoying. I too charge most of my purchases, but I always keep at least $100 in cash on me.

I hate going out with people who can't even buy a beer unless they can charge it.

I find it annoying, too. I also try to carry a minimum of $100 and feel broke without at least $40 in my pocket "just in case". You never know when the credit card reader will be broken after a restaurant meal or something.

The friends' usual defense is, "well if I kept money in my wallet I would just spend it". Doh! Instead they spend my money. Friends...

 

[FUEGO]

Although a person has be educated in general or in a particular field they may not know the true cost of cc transactions.

http://freakonomics.blogs.nytimes.com/2009/01/28/the-true-cost-of-credit/We all are paying a cost for the use of cc.

But I get a subsidy out of everyone else not using CC's.

And besides, cash isn't free for businesses either. There is risk of loss (robbery, theft, embezzlement, etc). Cash fees for deposits at banks. Armored car fees for larger retailers. Labor to count cash, reconcile drawers at shift end, and stock cash drawers the next day.

Overall, I would guess cash vs. credit probably has similar costs. And retailers like credit because the average purchase is a little bit higher which usually offsets the added fees. See McDonalds, for example, for a case study on why they started allowing CC's for purchases.

Some mom and pop places locally don't allow CC transactions for less than a certain amount. Around here it is usually ethnic Mexican or Asian groceries, or chinese or mexican restaurants or sub shops or pizzerias. I usually respect the limits in the rare event that I don't exceed their minimum purchase requirement. I know most small businesses pay a flat charge per transaction plus a percentage, so buying a $1 or $2 item may end up losing them money.

 

[hankster]

We use debit cards for most purchases over $200, but part of our spending control strategy involves envelopes of cash for several different categories. When I head off to the grocery store with a list of items to buy, cash helps keep me from impulsing on extras. It also helps to make sure I'm not hungry when I go to the store

 

[dex]

But I get a subsidy out of everyone else not using CC's.

There is no such thing as a free lunch.
If you want to ER use cash more.

Why We Spend More Using Credit Versus Cash : NPR

http://www.daveramsey.com/the_truth_about/credit_card_debt_3478.html.cfm

http://www.associatedcontent.com/article/142336/do_we_really_spend_more_with_credit.html
Statistically they found that on average you will spend 12-18% more when making a purchase with a credit card as opposed to cash. They also discovered that the average McDonalds transaction increased from $4.50 to $7.00. When they looked at vending machines, the average transaction size nearly doubled.

 

[ziggy29]

I'm skeptical of at least some of the anti-CC agenda behind these articles that talk about how people spend so much more on credit cards. My belief is that some of them (especially from Ramsey) are intentionally misleading.

How many times have many people paid the entire tab for the group having lunch, with the others paying you their share in cash? If I'm one of five at a lunch table who each owe $10, I skew the stats by charging $50 and getting $40 back in cash, though in reality I still spent $10. The study sees one $50 CC transaction instead of one $10 CC transactions and four $10 cash transactions. Think that can skew the numbers just slightly?

How many of these McDonalds transactions were two guys each spending $5, with one guy paying the entire $10 on the CC and his buddy giving him a fiver in cash?

This can show up as one large transaction as opposed to several smaller cash transactions. To the extent that these articles don't even account for very common situations like these which would understandably drive up the average CC transaction, they are very flawed.

Add to that the bias many people have against using CCs for small transactions and the argument is even weaker. I tend not to use mine at all under $10 as a courtesy to the merchant. There may be something to it, but failure to acknowledge these common realities makes me discard the entire study as useless (if not outright intentionally misleading).

 

[Zathras]

We use credit card (just 1) for virtually everything.
We get 2% deposited into our brokerage account and get a much better system of tracking than I can do on my own.

 

[dex]

I'm skeptical of at least some of the anti-CC agenda behind these articles that talk about how people spend so much more on credit cards. My belief is that some of them (especially from Ramsey) are intentionally misleading.

How many times have many people paid the entire tab for the group having lunch, with the others paying you their share in cash? If I'm one of five at a lunch table who each owe $10, I skew the stats by charging $50 and getting $40 back in cash, though in reality I still spent $10. The study sees one $50 CC transaction instead of one $10 CC transactions and four $10 cash transactions. Think that can skew the numbers just slightly?

How many of these McDonalds transactions were two guys each spending $5, with one guy paying the entire $10 on the CC and his buddy giving him a fiver in cash?

This can show up as one large transaction as opposed to several smaller cash transactions. To the extent that these articles don't even account for very common situations like these which would understandably drive up the average CC transaction, they are very flawed.

Add to that the bias many people have against using CCs for small transactions and the argument is even weaker. I tend not to use mine at all under $10 as a courtesy to the merchant. There may be something to it, but failure to acknowledge these common realities makes me discard the entire study as useless (if not outright intentionally misleading).

If you back up your suspicions with some studies that would be helpful.

As to the spending increase; neither of the examples you give would be included in the analysis. Even if they were; considering the number of cc transactions, it is very doubtful if they would skew the numbers in a way to cast doubt on the general assertion - people spend more with cc.

 

[Caoineag]

I used to use my debit card for everything but use only cash now because its easier to put limits on the spending. I am in my 20's and most people my age used a credit card or debit card for purchases in the past. I do see a lot more cash now than I used to.

 

[FIREd]

DW and I tried the cash vs. CC experiment and found that we spent LESS with CC. The reason is simple: accountability. At the end of the month, we can see exactly how we spent our money. With cash, we found that the temptation to fudge the numbers was just too great (spend your gas money on hobbies and use higher gas prices as an excuse to ask for more cash before the end of the month for example). There is no hiding from the CC statement. The first year we started paying for everyting with our CCs and tracking expenses to the cent (downloading transactions from the CC website takes seconds), our expenses went down by $3K. There is no going back to cash for us but YMMV.

 

[dex]

DW and I tried the cash vs. CC experiment and found that we spent LESS with CC. The reason is simple: accountability. At the end of the month, we can see exactly how we spent our money. With cash, we found that the temptation to fudge the numbers was just too great (spend your gas money on hobbies and use higher gas prices as an excuse to ask for more cash before the end of the month for example). There is no hiding from the CC statement. The first year we started paying for everyting with our CCs and tracking expenses to the cent (downloading transactions from the CC website takes seconds), our expenses went down by $3K. There is no going back to cash.

Your issue isn't with cash vs cc - it is budgeting+ /tracking++ and honesty*.

+Excel spread sheet
++write down what you spend & enter in Exel
*Honesty - ??

 

[ERD50]

There is no such thing as a free lunch.
If you want to ER use cash more.

I'm not buying it either. Regardless, whatever the "average" person does is not what I do. I know that I simply decide if I need to buy something and then do it. Since I do get rewards with the card, cash may be a disincentive to buy, but that would only defer the purchase until I can use the card. If it can't be deferred, then the cash is used. Total spent is the same.

There is no free lunch, but often offers are made to a general public with the plan to make out on average. If you can play the game within the rules, and win on the margins, it's as close to a free lunch as you can get.

Of course, the CC transaction is in the price you pay, but I can't change that by using cash. So rewards is the best I can do.

I tend not to use mine at all under $10 as a courtesy to the merchant.

I often do this, but then I get a pocketful of change that I never use. I used to see the signs posted, "NO CC under $X", have not seen one in a long time, so I don't worry too much about it.

I bet I have not hit an ATM or bank for a withdrawal in over a year. I use the card for almost everything, and the occasional "put lunch on my card, and my friend gives me cash" seems to keep my wallet at the $100 that I feel comfortable with.

-ERD50

 

[FIREd]

Your issue isn't with cash vs cc - it is budgeting+ /tracking++ and honesty*.

+Excel spread sheet
++write down what you spend & enter in Exel
*Honesty - ??

Wow... Time to get off this thread.

 

[ziggy29]

If you back up your suspicions with some studies that would be helpful.

As to the spending increase; neither of the examples you give would be included in the analysis.

I don't see how you can completely strip out those situations. If I go somewhere and spend $5, I pay cash. If it's $20, I pull out the plastic. I don't buy what I need for $5, pull out a $5 bill, and then compulsively buy something else for another $15 and pull out the CC.

And did they norm for the people who are compulsive and can't stop spending money they don't have? Can we confine these studies to people who pay their balance in full each month? Of course the compulsive spenders won't be using cash; they don't have it!

The fatal flaw in these studies is assuming that the payment type drove the level of spending rather than the other way around. It's a classic case of mistaking correlation with causation.