[...] JD linked to my story about how credit cards get you in, keep you in and keep you spending, I had never heard [...]

If you feel your credit card company is keeping you “hooked” on credit, then you are using it wrong or you have a financial problem. Ideally, you should be using your credit card for convenience: An interest-free 25 day loan. If the cardholder can’t pay the balance each month, then he or she has a financial management issue. This is not an illegal drug sold on the street corner that addicts people into uncontrolled use. Maybe it attracts those who don’t use it properly, but if you go out and buy a car you can’t afford, total it, and you never learned how to drive, is it the car dealer’s fault for giving you a good deal on a car? Or is it the fault of the irresponsible consumer who used the product without proper training and in a way that caused the damage?

If you can’t manage the cards you have, cut up some of them or do what I do, and leave most of them locked up at home. I carry 1 credit card and 1 debit card at a time, with exception of a gas card and sometime a home improvement store card for major purchases. What you charge each month should be what you pay.

Once again, JD, another good article!!!

I don’t think so.

If a business doesn’t want me to use a credit card, then they should lower the price a bit to give me incentive. Some businesses actually do offer a lower price for cash sales.

Collection inquiries cannot be stopped by visiting the site above. Creditors have the right to pull credit data on their customers in the name of account maintenance. The newsworthy item is the fact that Experian is proactively providing this information in the form of a trigger file.

Also, it seems that American Express has launched a bill-pay service — I’d sure like to get 2% off my mortgage every month (not to mention an extra month’s interest on that money in the bank)… if you’re financially responsible enough it seems like a no-brainer to me…

-d

What hasn’t been mentioned is that ANY form of payment has associated transaction costs.

CASH: Employees have to spend time counting cash in their drawer when they leave, and then the manager has to double-check it, sort it, and take it to the bank (or pay a third-party armored truck service to take it to the bank). Paying in cash seems like it’s store-friendly until you realize that the store has little use for cash. They pay their suppliers, employees, etc. with checks. Their only use for cash is for making change, and only a small amount is needed for that.

CHECKS: Checks have their own set of disadvantages, as well. They can take time to clear, and bounced checks remain a problem (checks are the only form of payment where this is a possibility). They also have to be processed and sent to the bank. For commercial accounts, banks often charge a per-check fee (there are many things that you get for “free” in a personal checking account — imagine if you had to pay 20 cents per check that you deposit!).

Anyway, all of this is to say, ANY form of payment has its associated transaction costs. It’s just part of doing business, so don’t start feeling too sorry for stores or trying to figure out what’s best for them. They know what’s best for them, and they can choose to accept credit cards or not (and what kinds of cards to accept — I personally always try to use my AmEx card, but many places don’t accept it because AmEx fees are higher than Visa/MC or Discover). They’d rather have your business and have you pay with a credit card, than not have your business at all.

He might just be in a bad setup, but since then I’ve carried cash with me to pay when I’m at mom & pop shops.

I have a rewards debit card which earns me I think .5% on every
purchase when I use my *debit* card, but select *credit*.

Basically, what I think is going on there (I’m speculating), is that
Mastercard or Visa is then able to charge the merchant the transaction
fee based on percentage, which is usually higher than the flat fee for
debit transaction. As a result, they then split that fee with me, the
customer, by giving me a kickback to make me feel good about my
collusion in this racket. Realistically, though, in the end, we’re
just hurting ourselves, since, in order to turn a profit, the merchant
has to then raise prices.

Debit: single flat fee, no matter how much is spent.
Credit: fee plus a percentage of the transaction.

The fee and percentage for credit transactions change depending on a number of factors, including the merchant’s business, manually entered vs. mag stripe read, customer present vs mail/telephone order or e-commerce, etc.

(Part of the reason that debit can be a flat fee is that debit transactions must be customer present, mag stripe read, with a PIN.)

There’s a “large ticket” program that offers merchant a flat fee for high-cost items – but the fee is $35, so it has to be a pretty expensive item to make it worthwhile.

If you really want to maximize local business profit, pay cash. It’s less convenient, but there are no infrastructure fees for cash (well, except taxes, of course).