More Americans using cash? (credit cards, debt, pay off, american express)

[Humanoid]

According to this:

Americans are using cash - not credit - for store purchases - Oct. 22, 2008

More Americans are using cash. Why would a person that is usually uses a credit card move to cash unless perhaps they've maxed out the card?

Whats the difference between using cash and credit card if you pay off the balance? I wonder if people are just hitting their credit limits in higher numbers (after all the credit card companies have been cutting limits).

[Huckleberry3911948]

its great. improved decision making. do i really want it. it is "here is 50 bucks" instead of "i might give you 50 bucks some day, maybe".
works for the french, works for me.

[Woof Woof Woof!]

I pay most things with cash. I just don't like using the credit cards anymore. I hate those banks!

[Humanoid]

Originally Posted by Huckleberry3911948

its great. improved decision making. do i really want it. it is "here is 50 bucks" instead of "i might give you 50 bucks some day, maybe".
works for the french, works for me.

If you pay off the balance there is no difference, actually the credit card is better. Its more convenient and you get rewards and/or cash back.

[chuck22b]

Originally Posted by Humanoid

According to this:

Americans are using cash - not credit - for store purchases - Oct. 22, 2008

More Americans are using cash. Why would a person that is usually uses a credit card move to cash unless perhaps they've maxed out the card?

Whats the difference between using cash and credit card if you pay off the balance? I wonder if people are just hitting their credit limits in higher numbers (after all the credit card companies have been cutting limits).

Leave it to Humanoid to analyze the observation with cynicism. It might very well be the case that people have hit their credit limits (or credit card companies have dropped the limits / increased the rates).

IMO, this is a good thing because if people hit their credit limits then they will not be able to use their credit cards... and will be forced to limit their spending.

Hitting the limit is the same as looking in your wallet and having no cash. They are both controls on spending. Credit card limits let's the card companies control your spending (if you need someone to hold your hand) ... while using the cash in your wallet is a personal control on spending.

Some people prefer cash as a budgeting control. Using cash on hand is a control mechanism that is easier to use than checking the activity on a credit card weighed against account balances.

-chuck22b

[Humanoid]

Originally Posted by chuck22b

IMO, this is a good thing because if people hit their credit limits then they will not be able to use their credit cards... and will be forced to limit their spending.

If they've reached what I like to call the "point of no return" in their finances then when the credit limits get cut (or it runs out) they are going to collapse. I define the "point of no return" as point in your personal finance where your base cost of living (just the basics) plus your debt servicing exceeds your income.

So, yes they will have to limit their spending but they will also have to default on some of their debt. Another, issue that is likely to have a modest impact is 0% promotional offers. Its very hard to find such offers anymore and the deals originated last year should start to reset soon. Debt junkies have for the last few years been able to keep rolling over their balances to new 0% offers.

Originally Posted by chuck22b

Some people prefer cash as a budgeting control. Using cash on hand is a control mechanism that is easier to use than checking the activity on a credit card weighed against account balances.

Using cash for budgeting control doesn't work well, I've tried it. Now I use my American Express for all basic monthly costs (minus, things I write checks for of course). Doing this makes it extremely easy to see what I'm spending on food, gas and basic entertainment. Their website also lets you create graphs of your spending, something that would take hours if you paid cash.

And of course I get cash back.

[Stac2007]

I use cash because I hate the fact that if something happens to the company I work for and I loose my job I don't have to worry about the monthly bills the banks send out each month. Also I pay no intreset on anything I purchase.

[sierraAZ]

Originally Posted by Stac2007

Also I pay no intreset on anything I purchase.

Neither do I, but I get cash back! The evil credit cards pay me for bothering to use them.

[Stac2007]

Originally Posted by sierraAZ

Neither do I, but I get cash back! The evil credit cards pay me for bothering to use them.

Are you sure? I worked for a number of large banks and they never gave away something without getting something even greater in return.

[texdav]

No the mercahnts get a fee from the person that accepts the card on a per centage of cost bases, Surprised you don't know this having worked in a bank. The card comapny doing this then gives the card user a portion of that.But in the end those that don't use card contribute money as this is figured in as a biusiness expense. So if you pay cash they get more from the sale. Then o0f course there are the ones that keep it all going that pay interest on puirchases on a card because they don't pay the full amount.