Author Topic: Payment methods  (Read 7564 times)

Snowboard junkie

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Payment methods
« on: November 10, 2013, 08:03:02 PM »
Is there really a difference in what you buy / how much you buy when you pay with cash vs with a credit card?

What is your preferred method of payment?

(Just curious)

Greg

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Re: Payment methods
« Reply #1 on: November 10, 2013, 08:09:22 PM »
Depends... some places offer a cash discount.  Some of my contractor supply places also offer a cash discount if you pay your account before the 10th.  "Cash" in these cases means not using a card, because the card processing fees cost so much.  Pay with a check by the 10th and it's 3% off!

geekette

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Re: Payment methods
« Reply #2 on: November 10, 2013, 08:31:22 PM »
I pay with a rewards card whenever I can, which is 99% of the time.

Richard3

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Re: Payment methods
« Reply #3 on: November 11, 2013, 01:20:21 PM »
That depends how well you've trained yourself that plastic money is still money. Suckers may pay more when it's plastic because they don't remember this. I don't.

On a practical level you can only spend up to the cash in your wallet, while you can spend up to your account balance on a debit or credit card.

I prefer rewards credit cards, although I don't have access to a good one at the moment (best I can find is $50 a year for 1% if I spend $10k).

geekette

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Re: Payment methods
« Reply #4 on: November 11, 2013, 01:44:24 PM »
I don't know where you are, Richard3, but Chase Freedom is free and has better rewards than that. 

Richard3

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Re: Payment methods
« Reply #5 on: November 12, 2013, 01:30:18 PM »
I'm in New Zealand, so none of the American offers are available. :(

ketchup

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Re: Payment methods
« Reply #6 on: November 12, 2013, 02:51:15 PM »
I pay with cash when I have it in my wallet (which is often, as my roommates reimburse me for their portion of household stuff often), and rewards credit card when I don't have cash on me (or less than like $25 on me).

dadof4

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Re: Payment methods
« Reply #7 on: November 12, 2013, 05:38:56 PM »
Rewards credit cards.

You get the rewards. (Thank you, Captain Obvious)
You get great tracking of your expenses.
You get buyer protection (extended warranty, ability to dispute charges).
Some stores track your purchases, so you can return stuff bought with a CC without a receipt.
You don't care if it's lost or stolen.
You don't need to run to the ATM to get more of it.
You don't have to worry about what to do with small change.
My CC has a picture of my kids on it, cash has pictures of some presidents that aren't even related to me.

Stache In Training

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Re: Payment methods
« Reply #8 on: November 12, 2013, 09:24:58 PM »
Rewards credit cards.

You get the rewards. (Thank you, Captain Obvious)
You get great tracking of your expenses.
You get buyer protection (extended warranty, ability to dispute charges).
Some stores track your purchases, so you can return stuff bought with a CC without a receipt.
You don't care if it's lost or stolen.
You don't need to run to the ATM to get more of it.
You don't have to worry about what to do with small change.
My CC has a picture of my kids on it, cash has pictures of some presidents that aren't even related to me.

+1.  Everything he said is why I use reward CC's too... except that I have my dog instead of kids on my CC.  :P  But I have to agree with previous answers.  You must train yourself that plastic money is just like green money.  It's hard to do, and if I couldn't do it, then I'd go right back to cash, in order to make sure I spent less.

jfer_rose

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Re: Payment methods
« Reply #9 on: November 13, 2013, 09:31:56 AM »
Like others here, I make the majority of my purchases on a rewards credit card.

So many personal finance pros say that people spend more when it is a credit card vs cash, but I am just the opposite. Since I use Mint.com obsessively, every purchase I make with my credit card gets tracked and so I give thought to every one. But if I happen to have cash on hand I spend it without abandon.

pachnik

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Re: Payment methods
« Reply #10 on: November 13, 2013, 10:24:20 AM »
I usually pay in cash for 'every day' things like groceries, eating out.  I pay for other things with my debit card.  Things like gas, dentist visits.  Not sure if this is considered the same as cash. 

Lately, I have used my credit card to pay for a mini-vacation and 2 computer upgrading classes that I am taking because I ordered these items over the phone/internet.   What I dislike about using my credit card is seeing the big, long statement of money owing.  Yuck!   I never really use my credit card if I can avoid it which is too bad since there are all those money back rewards cards now.   This is what works for me.

gecko10x

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Re: Payment methods
« Reply #11 on: November 13, 2013, 10:30:55 AM »
2% rewards card for every purchase I am able. Tends to net us several hundred dollars per year.

If you use a system where you record money "spent" at the time of purchase, then there is no statement fear or spending too much. (Like YNAB, or perhaps Mint, or some other record-when-spent system.)

dadof4

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Re: Payment methods
« Reply #12 on: November 13, 2013, 10:48:46 AM »
Like others here, I make the majority of my purchases on a rewards credit card.

So many personal finance pros say that people spend more when it is a credit card vs cash, but I am just the opposite. Since I use Mint.com obsessively, every purchase I make with my credit card gets tracked and so I give thought to every one. But if I happen to have cash on hand I spend it without abandon.
Another nice thing about Mint.com is that it "demystifies" credit balances. Before using Mint, I never had a good handle on my spending or current debt with CC - between 10 different cards, and then statement balance and unbilled activity, sometimes actually paying when the purchase was done two months prior... It was all a blur,and I had to rely on my frugal nature and occasionally checking statements.

Now, every purchase done on any card at any time is immediately accounted for, both on the "transaction" page which I check daily, and on your "debt" which gets subtracted from your "cash" to give you an up to the minute picture of where you actually are.
That's without mentioning how nicely it puts transactions in buckets for further analysis.

Rural

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Re: Payment methods
« Reply #13 on: November 13, 2013, 05:41:45 PM »
I use a rewards card for everything I can. Just put property taxes on it today, which should get us back a mil or two, I guess. Pay in full monthly, of course, but at least I can periodically apply the cash back to the bill itself.

m8547

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Re: Payment methods
« Reply #14 on: November 13, 2013, 07:14:11 PM »
I try to pay cash at smaller places. They usually seem to appreciate saving the fees. I'll also try to pay cash at stores that I know track my card, mainly Target, unless it's a larger purchase since I don't like to carry much cash.

Stache In Training

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Re: Payment methods
« Reply #15 on: November 13, 2013, 08:00:51 PM »
I try to pay cash at smaller places. They usually seem to appreciate saving the fees.

That's true.  If I'm buying anything under like 5 dollars, or at a mom and pop shop, or in a small mountain town, for instance; I'll try to pay with cash if I have it, because it's still the same cost to me, but it saves them money.

geekette

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Re: Payment methods
« Reply #16 on: November 14, 2013, 10:21:30 AM »
Smaller stores may appreciate the lower fees, but there are costs associated with handling cash as well.

I get 5% off at Target with their card, so I'm selling my privacy for pennies.  I just don't care that they know I'm buying ice cream and soap.  Same with all the grocery stores in our area (not the 5%, but all the sales are tied to the "loyalty" card). 

jesstach

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Re: Payment methods
« Reply #17 on: November 14, 2013, 11:45:52 AM »
I use a rewards credit card for everything I possibly can. I use Mint to keep track of spending, but also keep an Excel spreadsheet. It looks like this:

Checking account balance $XXXX
Less: automatic bill payments -$XXX (just the bills coming out until my next paycheck)
Less: credit card balance -$XXX
= Available balance $XXX

That way I never spend more on credit cards than I have in my checking account. I update the spreadsheet at least every couple of days. I check my credit card statements online when I update the spreadsheet. I pay off the balance in full either weekly or bi-weekly. No need to wait for the statement to come.

I think if you can track your spending and not spend more than you have on credit cards, then you should use them and get 1-5%+ cash back (or travel rewards). Otherwise, stick with cash. If you're carrying a balance and paying 11-17% interest on the balance, that wipes out any rewards benefits you earned.

Bruised_Pepper

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Re: Payment methods
« Reply #18 on: November 14, 2013, 12:00:04 PM »
I think if you can track your spending and not spend more than you have on credit cards, then you should use them and get 1-5%+ cash back (or travel rewards). Otherwise, stick with cash. If you're carrying a balance and paying 11-17% interest on the balance, that wipes out any rewards benefits you earned.

I'm not terribly surprised that everyone uses cash-back/rewards cards, since it's the best purely financial strategy.  I would just be concerned about forgetting to pay/an auto-pay malfunction causing me to rack up a months worth of interest all in the name of gaining ~$200/year (Using 1% cash back and my yearly expenses of ~$20,000).  I've never dealt with rewards/points cards before: could you get more than the typical 1-2% by committing to travel points, etc. instead of cash?  I'd be interested in doing that if it could fund my yearly cross-country plane ticket.

auntbecky

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Re: Payment methods
« Reply #19 on: November 14, 2013, 12:02:38 PM »
I keep an Excel spreadsheet. It looks like this:

Checking account balance $XXXX
Less: automatic bill payments -$XXX (just the bills coming out until my next paycheck)
Less: credit card balance -$XXX
= Available balance $XXX

That way I never spend more on credit cards than I have in my checking account. I update the spreadsheet at least every couple of days. I check my credit card statements online when I update the spreadsheet. I pay off the balance in full either weekly or bi-weekly. No need to wait for the statement to come.

I am loving this.  I think I'll set this up on another tab on my excel sheet tonight.

MrsPete

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Re: Payment methods
« Reply #20 on: November 14, 2013, 03:37:27 PM »
I've read -- and I'm sure that you all have too -- that the average person tends to spend more when he's paying with a credit card since it doesn't always "feel like real money".  I don't think I fall into that category:  I'm very careful with my choices, regardless of how I pay. 

I tend to pay for just about everything with my rewards credit card. 

seattlecyclone

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Re: Payment methods
« Reply #21 on: November 14, 2013, 04:31:34 PM »
I tend to use rewards cards for most purchases. I have a few of them that offer different rates on different purchase categories. By picking the right card for the situation, I imagine my average cash back percentage is well over 2% at this point.

There are only a few circumstances where I won't use the rewards card. One example is for certain bills that tack on a fee for using a credit card (our local gas utility and property taxes fall into this category). These fees are typically more than the cash back percentage I would get for paying with a card, so I use cash.

I'm also mindful of the credit card fees that smaller merchants have to pay. Last I heard, the most common model is for the credit card company to charge the merchant a fixed "swipe fee" per transaction, plus a small percentage of the transaction value. That means they have to pay a relatively huge percentage for smaller transactions. National retailers often have agreements to limit these fees, but the smaller businesses do not. Because of this, I tend to pay in cash at small, independent businesses when the bill is below $15-20. I figure those few cents I'm sacrificing will come back to me in the long run if I do my part to keep more money in the local economy and out of the big banks.

Snowboard junkie

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Re: Payment methods
« Reply #22 on: November 16, 2013, 11:53:08 PM »
The discrepancy between what I spend when using credit cards and what I spend using cash seems to be real for me, and since it works out to about 10% the potential rewards are not sufficient to justify their use.

However, i suppose with better discipline the cards may yet be useful.

Rural

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Re: Payment methods
« Reply #23 on: November 17, 2013, 03:26:01 PM »
Smaller stores may appreciate the lower fees, but there are costs associated with handling cash as well.

I get 5% off at Target with their card, so I'm selling my privacy for pennies.  I just don't care that they know I'm buying ice cream and soap.  Same with all the grocery stores in our area (not the 5%, but all the sales are tied to the "loyalty" card).

I usually sign up for rewards cards with a fake name and addresses or  just nev give them the paperwork at all. Still get the discounts, but none of the junk mail.

geekette

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Re: Payment methods
« Reply #24 on: November 17, 2013, 09:22:49 PM »
The Target card is tied to a credit card (or bank draft) so no go on that one.  The others (just take phone numbers) and I share with friends ;-).