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Monday, November 23, 2009

CASH or CREDIT - Revisited

“Cash or Credit?” Revisited
By Alan Joseph
I wrote an article last August about the hidden cost of using credit cards leading to my advice to pay with cash. With the holidays approaching, I thought to add a few interesting points for you to consider before you reach into your wallet.

It is estimated that worldwide, there are 10,000 credit card transactions made every second.

Americans charged about $69 Billion in 1986. By 2008, credit card charges had increased to $1.8 Trillion.

It costs the typical merchant about 3% of the total purchase when a customer pays with a credit card, about $54 Billion taken out of merchant pockets last year.

Americans currently owe about $950 billion in credit card debt with an average interest rate of about 13%....costing about $123 Billion in finance charges.

This is serious money having a very serious impact across America and right here in Sonoma County. Don’t believe me? Ask anyone in business how taking credit cards affects them. Most owners tell me that credit card use is steadily increasing and taking more and more from their shrinking profit margin. Exact figures about credit card use in our county aren’t readily available, but I would wager that Sonoma County residents sent the credit card companies over $250 Million in fees and finance charges last year.

So what can you do? Hey, if times are times are tough, use your credit as wisely as you can. But when you are shopping locally and have enough money to cover expenses, then I would strongly suggest that you:

• Pay with cash
• Write a check
• Use your debit card, there are no interest charges and the fees are less

And about Rewards programs: Did you know that businesses are charged higher rates when they accept rewards cards? There is no free lunch.

So remember, if you go out to eat, pay with cash….buy a Xmas present, pay with cash…..get groceries or get your car tuned up, PAY WITH CASH. Come on, use that green stuff and help keep Sonoma County cash where it belongs, right here at home.

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