The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: K-ice on August 26, 2015, 09:25:31 AM
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I was wondering how you pay for things.
My SO and I were just saying we hate going to the bank machine and rarely pay cash.
This article also prompted me to think about things.
http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com//news/fp-street/mastercard-is-at-war-in-canada-and-its-not-against-who-youd-expect-2
I think the answers will be different for different countries. I have heard Canada is very debit (Interact) friendly. My SO used to use this a lot but now we collect points on the same CC
I would say 95% of my purchases are on my CC. I find it is good to go over everything at the end of the month and then just pay one bill in full.
All bills are put on the CC, if possible or direct withdraw from my bank account. I still need to write 1 cheque per month for Daycare.
I understand that if you have CC issues, cash or debit is probably better to ensure you can afford it and also psychologically cash is the most tangible.
So I was just wondering, how do you pay for things? & do you think the method of payment affects your spending habits?
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I'm Canadian, so my answers might differ from American users.
First choice for most payments: credit card. I get a 2% cash back (about as good as it gets in Canada, sigh), and it's paid off in full every month so there are no interest payments or fees. I net about 400$/year from that (note: our house insurance, car insurance, groceries, life insurance, electric, telephone, etc: everything goes on the credit card. What you see is basically the total amount of our non-mortgage spending).
Second choice: cash. It's convenient for small amounts (coffee, 2$ widget from the hardware store, etc). It's handy in stores that charge a fee for credit card processing (they're not supposed to, but some do anyway). And, finally, if someone is doing work for you and you pay them cash, sometimes you can negotiate the final amount of the bill. After which, whether they chose to report the income is their own business. ;)
And to your point re: Canada: debit is my LAST choice, because our bank, while otherwise decent, charges per transaction over 15 transactions/month. 15 covers out paycheques and transfers to mortgage/investments/credit card/a cheque or two, but doesn't really give a lot of leeway to make purchases. I refuse to pay a monthly fee to pay for things when my credit card will pay ME a fee so I can pay for things. When given the choice, I prefer it when the money flows towards me instead of the other way!
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I rarely use my CC, my wife uses it more often, which makes sense because she shops and buys gas for the vehicles.
When my wallet gets low, I refill with $100 and that will last 1 to 3 weeks. If I get low and need to, I use the CC.
We have a small business and we have never accepted CC's, but more and more my customers don't have cash and
need to go to the cash machine to get it.
I have not got money from a cash machine in 35 years. I don't have a debit card.
The other evening, my wife was tallying up the days receipts, I said when you're finished I need $100. Later she gave me 5 $20 bills,
which I stuck in my shirt pocket. Next day I was out getting a part for my lawn mower, I didn't have the money, had to pay with CC.
I knew my wife had started the laundry, when I got home I opened the dryer and located 5 clean $20 bills.
Please, no accusations about laundering cash! :-)
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Everything on the CC we're using to hit minimum spend, then move over to next CC once met.
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90% debit card, 5% credit card (usually online), 5% cash (incidentals, vending machine at work, etc).
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Mostly credit card for the cash back and because it's easier to track. I hate worrying about losing cash and trying to remember what I spent it on.
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We use the debit card 12 times a month, as that is required to get a good interest rate on the checking account.
Other than that I use my credit card for anything else. I use cash maybe 5 times a year, if someone gave it to me; I go to an ATM less than once every 2-3 years.
A lot of bills get drawn straight from the bank.
I truly hate cash because it disappears into thin air. If you give me a hundred dollars, a few days later it will be gone and I will have no idea where. There is just no accountability to cash. My credit card itemizes the purchases and I have to see that. I also have to see a total. That's real to me. Seeing a big long list and a giant dollar amount stops the urge to spend!
Oh, once I have daycare, I will need to get checks. I cannot believe they can't do an electronic payment. Who even has checks anymore?
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I try to use my cashback CC's to maximize savings and autopay/debit for things I can't pay with my CC like my mortgage.
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Everything but rent is put on either my Amazon CC or Soutwest CC. Basically depends on what we're planning on doing this year.
This year it has been a mixture of travel and bigger purchases (new place... we got a grill with my Amazon points). A wedding has me using the Southwest points for travel across country for the 2 of us... for "free". Points can be useful depending on if you pay off your balance or not.
2 years ago I used my Amazon points to buy dog food for the whole year (~$40/month).
EDIT: I forgot that CostCo doesn't take CC at the moment. So for that I'll use cash or my bank card... usually ~$300/month.
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Mortgage and insurance paid out of my bank account. Lunches paid for with cash. Everything else with the CC.
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Everything except mortgage goes on rewards credit cards. Paid in full every month. Very easy to track spending in mint that way and see when I need the occasional facepunch :)
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Everything except mortgage goes on rewards credit cards. Paid in full every month. Very easy to track spending in mint that way and see when I need the occasional facepunch :)
Same here. Mortgage and life insurance are the only things that come out of the checking account directly. Everything else runs through a rewards card which gets auto-paid in full on the due date.
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I also use a credit card for every transaction possible. Some exceptions are: mortgage, life insurance, electricity bill, taxes...and that's about it. Everything else gets cashback. It's already baked into the price of your goods, might as well get some of it back.
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The Netherlands is a very debit-card friendly country, paying with a debit card is possible nearly everywhere (even market stalls are switching to mobile debit payment now), whereas credit cards are far from universally accepted. So for me it's 99% debit, cash once in a blue moon and credit card only when buying online at a place where they don't take debit (i.e. outside the Netherlands: we have a very good debit-card based system for online purchases here that most web stores use).
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Rent: a check.
Utilities: direct debit from bank account.
Credit cards: everything else (with a few exceptions)
The exceptions... I try very hard to pay cash at one or two shops I frequent, because they are small businesses I am trying to support (owned by friends, or just really good for the community). I figure it's sort of like a 2% donation (I 'donate' my cash back to save them the credit card processing fees) and I'm OK with it. It probably works out in my favor in the long run, because sometimes those small indie stores will "forget" to charge you sales tax when you pay cash.
There are also some weird little avant garde music venues I go to that don't accept credit cards, and don't have cash registers or paid staff, etc. For those I make life as easy as possible for the volunteer staff and bring exact change.
The perks for going out of my way to be nice to folks like these are definitely better than 2% cash back. I think that's what businesses refer to as "intangibles." ;-)
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Mortgage, car, and water bill: direct debit
Everything else: credit card
Simplifies accounting, pays cash rewards, paid off monthly (occasional 0% exploits aside), reduces time spent reconciling and forecasting, and float allows me to have an average of a couple grand more invested at any given time. Also serves as free overdraft protection.
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Every bill except for rent: credit card
Rent: direct deposit from checking
95% of spending is on credit card. The only times it isn't is when the business won't take AMEX.
I haven't withdraw cash in years. I have enough Craigslist sales to keep a decent amount of cash in my wallet which I rarely use anyways.
I'm going to start travel hacking soon so I'll have credit cards that everyone will accept.
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Credit card mostly. We put the majority of purchases on a cash back rewards card, then pay it off every month.
I use cash for the cash only places I go to (infrequently). I use my debit card so infrequently that I often have trouble remembering my PIN.
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Mostly CC. Direct withdrawal for mortgage. Online bill pay for some utilities. Cash for the occasional meal or coffee out with friends, parking fee at local hiking areas, and the like.
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Credit card for everything I am able, cash at places that don't accept credit, and P2P payment/transfer for rent.
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Mostly CC for the rewards.
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Credit cards for everything except rent pretty much. We've put almost all spending toward sign up bonuses, so get around $5,000 a year in bonuses.
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Credit cards for everything unless the purchase is under $10 or so.
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I use my debit card for everything (US here), but now I'm thinking I need to get a cash back credit card! I don't have credit card issues - zero balances on all of them.
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We really need to figure out how to pay rent/mortgage with cc's and minimal fees
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So if cash was once King it sounds like the King is dead.
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MasterCard for everything for 2 reasons.
1. It's easy to track when all purchases are in the same place.
2. Rewards
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I was just thinking about this topic a few weeks ago and was kinda impressed to realize I haven't physically held, or carried cash on my person for well over a decade now. All my bills are paid online and my other expanses are paid with bank cc/debit card. Even coins for that matter, haven't used them but I think I have a jar with a few dollars worth somewhere in the house.
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We really need to figure out how to pay rent/mortgage with cc's and minimal fees
Best way seems to be to purchase a VISA gift card with a credit card then use the gift card/bill pay system. My landlord allows me to pay rent directly with a credit card, but the system requires a $27 fee. No thanks.
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We really need to figure out how to pay rent/mortgage with cc's and minimal fees
Best way seems to be to purchase a VISA gift card with a credit card then use the gift card/bill pay system. My landlord allows me to pay rent directly with a credit card, but the system requires a $27 fee. No thanks.
In Canada I know some landlords are willing to take email money transfers. You can't collect CC points and they cost about $1.50 depending on your bank. But it's a pretty hassle free way to pay.
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My wife and I have switched almost exclusively to debit card over the last couple months. YNAB has made the tracking part super easy (and made us super accountable) and we've switched over to no fee banking with Tangerine so I can use my debit card all day long and not have to worry about being nickel and dimed to death. We were heavy credit card users for years prior to this, telling ourselves that we weren't buying anything we wouldn't otherwise and that it made for easier accounting. Truth was that was a load of crap.
Now there is an actual physical twinge every time I pull out the debit card. Deep down I know the money is being spent right here, and right now. It really helps me to clamp down on extraneous spending. Maybe in time I'll have the discipline to use the credit cards again. But that day is not today.
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Mostly credit card for the cash back and because it's easier to track. I hate worrying about losing cash and trying to remember what I spent it on.
This.
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US here. I almost never use cash, and usually don't have any.
Most bills and purchases are on my Discover card for the rewards. Cash back gets applied to the balance every month. Rent - p2p transfer (no fee). Car - check because they're incredibly dumb and don't have a website that I can find. Utilities - currently bank pay, but need to figure out if I can pay with the Discover.
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I never have cash on me unless i'm going somewhere that doesn't take credit/debit. I use credit for everything I can. I use my debit card at Aldi and cash/check at my barber. Up until recently I had to write a check for rent. Now I have my rent set to auto withdrawal every month via an online portal my landlord set up. All of my other bills are set to autopay as well. They only thing I have to pay manually is my renter's insurance. Recently I went to my internet provider to return the modem/router that I was renting from them, because I got my own to get rid of the monthly fee. I was waiting in line at the office behind people (mostly older) that had gone in there to pay their bill person. That kind of blew my mind.
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Very few people here will use anything other than credit unless they have a very good reason.
First you get some kind of points/rewards. Second, you are getting an interest free loan for 21 - 56 days.
The only stuff I pay for with debit (it's Interac, not Interact, by the way) is at Dollarama, where they don't accept credit. Or stuff like gas (the, um, gaseous type) where there is a high enough fee for paying with credit to make it not worth it.
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I live in Switzerland. Usually I pay for everything in cash unless it's more than ca 100$, in that case with a credit card and the same of course for any online purchases. I always have at least 50 francs with me (ca the same in dollars). Regular bills I pay with a wire transfer from my bank account (automatic in the case of rent and insurance).
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Everything on the CC we're using to hit minimum spend, then move over to next CC once met.
Exactly this, although for the first time right now I'm working toward a minimum spend on a debit card to get the bonus miles.
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since i invest all my pay into investing i do it like this. pay for things with CC. on payday p[ay it all off before interest gets added. invest what ever's left over
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Everything but my house note goes on a cc that is paid in full every month. It's easy to track my spending and earns the cash back reward.
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I use a cash back credit card for most incidentals.
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Another Canadian here - interesting question.
Major bills - mortgage, Hydro, MasterCard, Visa are through online banking
Newspapers and cell phone are automatic debit to CC.
I used to use my Air Miles debit card a lot, but now use my CCs: one gets points, one gets cashback. Costco takes my MasterCard.
Dollarama and Winners are two of the few places I use cash or debit. Winners because I don't trust their security any more.
Most places not only take CCs, they have the Interac tap function, which makes it easy to do small transactions without holding up the line at the cash. It felt a bit odd paying for a coffee at Tim's (all of $1.40) with a CC, but it was easy, and I didn't have the change.
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Everything goes on the credit card, for points. CC gets paid off in full every month. Some bills like Mortgage can't be put on the CC, so those get drafted directly from my checking account.
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I was wondering how you pay for things.
Contrarian opinion here. I pay cash for groceries and other local brick and mortar purchases, except gasoline. My credit union (debit) or credit card company does not need to know the details of my grocery purchases.
My credit cards are used for online purchases, paid off in full each month.
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Online banking for utilities, annual bills, and monthly credit card payoff.
Rewards credit card for all discretionary spending.
Done. Makes it incredibly easy to track everything, just two Excel downloads a month.
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Another vote for cash for everyday spending such as groceries, entertainment costs, drink at a pub, etc. All bills paid via direct debit to credit card for points and balance paid off in full at statement time.
The main reason I stick to cash for everyday costs is that I believe that taking out a certain amount every week forces me to stick to the budget - if i'm coming towards the end of the week i adjust my spending to ensure I don't exceed the budget allocation. This method works 90% of the time. If I put everything on credit card i'm concerned that I would lose track of spending and exceed the budget allocation.
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I worried about that also. However, I find that I can track spending really easily via debit and credit card, while cash just slowly disappears. The "trick" is online banking, I can see how I am doing any time I want to log on to my bank accounts.
My work-around is to have one account that covers day-to day variable expenses (basically food and gas, the odd bottle of wine). When one of those goes on the CC, the CC gets paid from that account. Consistent expenses (mortgage, insurance, house maintenance, etc.) come out of a different account.
Since I can see where I have spent money anytime I do my online banking, it is easy to see how I am doing on variable expenses. If that designated account is getting low, I know I have been overdoing things. I can also see seasonal variation (Hydro changes depending on season, for example - more in summer and winter, less in spring and fall).
Really, I have a non-budget budget - I have tried to lower fixed costs (no Bell bills any more, cell phone is as low as I can manage, I know the peak times for Hydro and avoid them). Variable costs - I examine needs versus wants, and make informed choices.
Another vote for cash for everyday spending such as groceries, entertainment costs, drink at a pub, etc. All bills paid via direct debit to credit card for points and balance paid off in full at statement time.
The main reason I stick to cash for everyday costs is that I believe that taking out a certain amount every week forces me to stick to the budget - if i'm coming towards the end of the week i adjust my spending to ensure I don't exceed the budget allocation. This method works 90% of the time. If I put everything on credit card i'm concerned that I would lose track of spending and exceed the budget allocation.
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I try to pay for absolutely everything by credit card, unless the fee out weighs the reward.
even most of my household bills are paid by cc, some dont allow it.
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Credit Card since it's easier to track every purchases so I can enter it on YNAB. Occasionally debit and very rare cash.
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Credit card. Why use my money when i can be paid to use someone else's? My Citi card pays me 2% back and I haven't paid interest in decades.
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Credit Card for everything except for my haircut...because the barber only takes cash.
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Rent is via direct debit, most of the bills are via BPay, and the remainder is either either debit (EFTPOS or Visa Debit) or cash.
Too many places are still cash only. I don't carry more than maybe $60 at a time normally though.
The only rewards credit cards I can find have an annual fee, so I figure it isn't worth it.
What annoys me is how hard it is to find a wallet with a coin pocket in it.
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As much credit card as possible. Rent has to be paid by cheque, unfortunately, but basically everything else earns us points. Since we split expenses right down the middle, credit cards are just SO MUCH EASIER since at month end we can just each pay off our half, rather than have to screw around with transferring money between each other's bank accounts.
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Same here, BofA rewards card. 1-3% plus then they match 75%. Gotta love that!
Sent from my KFTHWA using Tapatalk
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What annoys me is how hard it is to find a wallet with a coin pocket in it.
I had a really hard time with this the last time I needed a new wallet. All I wanted was something that fit in my pocket had a place for coins. It sounds like it should be so easy! Women's wallets all have coin sections but they are too big for pockets. Men's wallets are pocket-sized, but no coins. My mom ended up finding one for me when she was on vacation in Spain.
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The banks have specials - I ditched my last MasterCard for a different one with much better rewards. Technically it has a high fee, but my fee for the first year is zero. I did it on the phone with BMO client services, and told the client rep that when the fee kicks in next year that I will either ask for no fee, or switch to another one. Of course the interest rate is higher than on the old card, but since I never carry a balance, the interest rate is irrelevant (and if for whatever reason I could not pay it off in full at once, that is what my low interest personal line of credit, present balance $0, is for). Staying with the same credit card and the same bank made the switch effortless - my online banking shows the credit card, the only change was the actual card number, all the old credit activity is still there.
Of course none of the cards seem to have the same level or reward as the ones in the U.S., but we take what we can get, right?
The only rewards credit cards I can find have an annual fee, so I figure it isn't worth it.
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The banks have specials - I ditched my last MasterCard for a different one with much better rewards. Technically it has a high fee, but my fee for the first year is zero. I did it on the phone with BMO client services, and told the client rep that when the fee kicks in next year that I will either ask for no fee, or switch to another one. Of course the interest rate is higher than on the old card, but since I never carry a balance, the interest rate is irrelevant (and if for whatever reason I could not pay it off in full at once, that is what my low interest personal line of credit, present balance $0, is for). Staying with the same credit card and the same bank made the switch effortless - my online banking shows the credit card, the only change was the actual card number, all the old credit activity is still there.
Of course none of the cards seem to have the same level or reward as the ones in the U.S., but we take what we can get, right?
The only rewards credit cards I can find have an annual fee, so I figure it isn't worth it.
If you keep $5k in a BMO premier account you can get the cc fee waived. New cash back card (1.75%, comes with auto breakdown cover), and the travel one (4 airport lounge uses a year) are good.
Compared to the US, no, not amazing, but not bad. There is an RFD thread about 'best ccs with at least $200 sign up bonuses' and there are at least 10 of them. $2k ain't bad.
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I'm into credit card hacking, so CC for almost everything (always paid off every statement).
- Costco American Express for Costco trips / car rental while traveling (for the insurance)
- Health insurance, bills that take CC, etc paid for via one of the airline cards to get miles: Southwest card, American Airlines card, next in line after I get bonus miles on American will be Delta card, and Chase Sapphire.
- ACH transfer from checking for bills that do not take CC
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Almost always credit card. I usually keep a couple bucks cash for the "cash only" places.
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Pretty much anything that can go on a CC does. I'd be turning down free money if I paid cash.
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Anything that can go on the CC without paying fees higher than rewards goes there. This is both for the reward and the ease of tracking. Recurring bills are set to auto-deduct from the CC to streamline the process even more. If it can't go on the CC, it is set to auto-pay from our checking account (utilities, mortgage, CC payment). I do not have a debit card. They closed mine due to inactivity. I never withdraw cash. I sometimes randomly have cash from a gift or being paid back by a friend or similar. This lasts me forever, because I just don't use cash.
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Anything that can go on the CC without paying fees higher than rewards goes there. This is both for the reward and the ease of tracking. Recurring bills are set to auto-deduct from the CC to streamline the process even more. If it can't go on the CC, it is set to auto-pay from our checking account (utilities, mortgage, CC payment). I do not have a debit card. They closed mine due to inactivity. I never withdraw cash. I sometimes randomly have cash from a gift or being paid back by a friend or similar. This lasts me forever, because I just don't use cash.
So do you not have a bank account or something? Or do you only have savings accounts without debit cards?
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So do you not have a bank account or something? Or do you only have savings accounts without debit cards?
He mentions having a checking account sans debit card.
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So do you not have a bank account or something? Or do you only have savings accounts without debit cards?
He mentions having a checking account sans debit card.
/face palm. Stupid me.
Teacherstache, they closed your debit card to inactivity?? What country are you in? And what bank is that? I haven't used my debit card in almost a year for one of my bank accounts, and they haven't closed my debit card (or maybe they did without telling me....?)
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I have a savings account with a credit union that ate up $20.09 due to account inactivity fees. It has $5 left sitting there to maintain its minimum balance. Found out a few days ago. I think it was inactive for a year and a half or two. Oh well :)
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Why do people set arbitrary minimums for credit card purchases?
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90% go on credit cards (most groceries, utilities, pet supplies, entertainment, etc.). All our CCs are rewards cards, and we're careful to recognize when our Chase Freedom cards go on 5% cash back--totally exploited this when, during our wedding, there was 5% back at restaurants (our reception was at a local brewpub)! We cash in our rewards at the end of the year, and we're looking at near $700 in rewards right now, with three months to go.
Rent and phones are checks automatically cut from CapitalOne360 and sent to our landlord and family plan administrator (DH's mother), respectively. Aldi groceries are put on debit.
We occasionally have cash for cash-only purchases (hairdresser tips, cash-only restaurants, etc). Cash purchases are fairly rare.
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Why do people set arbitrary minimums for credit card purchases?
People as in...merchants?
I'm pretty sure that the merchant fee is a flat charge + a percentage.
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mortgage water hoa electronic payment
everything on cc to meet min spend for promo and then on to the next card
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My wife and I are on a fairly strict cash budget. We do both have CC's that we use for mostly internet purchases, gas, and travel for work.
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All bills are online through internet banking, except a couple that go through my cc. We don't use the cc much - except for business expenses. I like to keep life & business separate, but I don't mind a few points from business related stuff.
I usually carry a bit of cash, mostly for things like bus fare if I need it. I will get a $20, then see how long I can make it last. Sometimes it's weeks, on vacation it can just be a day or two.
Most things like groceries are with the debit card, mostly because we don't keep much of a cushion so I don't want to overuse the cc. If we decide to built up our liquidity a bit more we might just switch it all to the cc, but not yet.
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I do nearly all of my shopping on military bases or amazon. For base shopping, I use USAA's new american express credit card that earns 5% back, and for amazon I have their prime rewards card that also gets 5% back. Those cards are paid automatically from my checking account, and reward me a few hundred dollars per year.
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I was wondering how you pay for things.
Credit card for virtually everything non-mortgage. I get cash back. If I need some cash and I'm not at my credit union's ATM, I make a small purchase with a debit card (gum, candy, soda) and get cash back. No ATM fees, no transaction fees and I want the soda anyway.
I don't pay cc interest nor an annual fee.
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Why do people set arbitrary minimums for credit card purchases?
People as in...merchants?
I'm pretty sure that the merchant fee is a flat charge + a percentage.
Sorry, I meant buyers. People are saying they don't use there CC for purchases of less than $10, for example.
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Why do people set arbitrary minimums for credit card purchases?
People as in...merchants?
I'm pretty sure that the merchant fee is a flat charge + a percentage.
Sorry, I meant buyers. People are saying they don't use there CC for purchases of less than $10, for example.
Good question. Unless the merchant doesn't allow it I don't see why not
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Sorry, I meant buyers. People are saying they don't use there CC for purchases of less than $10, for example.
For very small purchases, the cash back I get is tiny and the fees charged to the merchant are high. I don't need to punish a local business just to save a handful of pennies. If it's a large national chain, then I don't really care and I'll use a card...