Last year I wrote about why I started carrying cash with me most places I go. It's not that I never use my credit or debit card - I just don't use them for small purchases, like those under ten dollars. A few weekends I witnessed an incident that made me think that more people ought to operate this way.

I was in a hole-in-the-wall kind of place looking to grab some quick food. The woman in front of me ordered something and the total came out to about five dollars. When she tried to pay with plastic, the cashier pointed to a hastily made "cash only" sign on the wall and told her she couldn't use a card; at which point she became verbally hostile and said something like, "people don't carry cash anymore! Don't you know this is the 21st century?! How do you expect to make any sales if you don't take credit cards?" Ironic, of course, because there was a line of people behind her with cash ready and in-hand.

(from Flickr user maury.mccown)

It seems like we've gotten to a point where the big banks have effectively convinced a significant proportion of American consumers that it's the responsibility of merchants to accept credit and debit cards for any purchase of any size, under any circumstance, and they owe it to us under the guise of "convenience". What most of them also probably don't realize is that such an attitude contributes to inflation, and the "convenience" comes at a cost that we all pay for.

Consider this... the first year I lived in a college dorm, there was a big controversy (by dorm standards, anyway) about how much electricity and heat was being used in the building. I don't remember the exact monthly bills that were cited, but they were ridiculous. When the university's housing department kindly asked people to shut down their PCs at night and turn off the lights and TV when they went to class, many students responded by saying "screw you, I pay so much money to live in this dorm that I'm going to be as wasteful as I want to be." The attitude ultimately became self-fulfilling. One reason it costs so much to live in the dorm because utilities are so expensive, and because it costs so much, people are content with being completely and utterly wasteful.

I'm not suggesting that people ought to use cash for every purchase they make; but for the small ones, if people were willing to pay cash, because it's the right thing to do, we all would actually be better off.


    On May 18, 2010 Anonymous said...

    Not to mention the ~2% interchange fee merchants must pay per transaction.

    If Phoenix Cafe Grosses $2,000/day, and all customers pay with Visa, that's $40 that goes straight out the door each day.... Or $14,600 a year... or $146,000 in a decade.

    On May 18, 2010 Anonymous said...

    Small-purchase credit / debit card use is immensely convenient when you're travelling through many governmental jurisdictions, many of which issue their own currency, and you're trying to keep track of your expenses; or, even in a single-currency environment, ditto. A cardslide, a tippytap on the GameBoy, and within the week the expense, denominated in your homebank's currency, is e-listed on a downloadable document and eminently reclaimable.

    Over the last week business took me to Poland, Czechia, Austria, Hungary, and Great Britain. Yes, in Poland, for lunch, I sampled fried-cabbage-based treats from streetside vendors. Yes, in Hungary I visited an internet cafe to check e-mail and a cukraszda for a dish of ice-cream. But that was as exploratory as I got in those two countries, because on the same streets were the Colonel and Micky D. Where credit cards are accepted. In Czechia, Austria, and Great Britain -- want to sample the pastry, check the cuisine? The lady behind the counter swipes your card, and the purchase is made. It may seem paradoxical, but availability of point-of-sale funds transfer makes it easier to dip one's toe into a different culture.

    "We should all carry cash, and we should all use it as little as possible." That's the rule by which I find myself living. What happened to the second half of your entry title?

    On May 19, 2010 Lis said...

    I've also read that people are more careful with their money when they pay with cash. It's more tangible than handing someone a plastic card.

    I read that when McDonalds switched from cash-only to allowing for credit cards that the average amount a customer spent there for a meal jumped from $4 to $7. That's huge.


    This post has generated an unexpected number of nasty comments (none of which I approved here). I realize this is an emotionally-charged topic, and while I welcome dissent, I believe quality discourse cannot occur when participants are unable to respect each other.

    Most people disagree with me on this question, and that’s just fine; but for the sake of not dealing with any more rude responses, I am closing the comments on this thread.