Saturday, May 8, 2010

Credit Cards, etc.

Here are some ideas on credit cards, as well as a "shortie" from Sid Bolotin. Remember that your contributions to this blog are always welcome. Just send them to me at riart1@aol.com.

Using credit cards (or debit cards for that matter … which are like writing an immediately- cashed check out of your checking account) costs money. Even if you pay your outstanding credit card balance in full each month, and presuming there is no annual fee for your card, you still are incurring a significant cost for the privilege of using the card. That cost is reflected in the increased price of merchandise which reflects what the merchant pays Visa, MasterCard, etc. to “belong” and the additional bookkeeping his accepting the cards entails. All of his customers, including those who pay in cash, pay about 3% more to cover these costs through his higher prices.

The rewards which accompany most credit card programs rarely come close to making up this 3% hit which purchasers pay. Those that offer apparently generous cash rewards usually do so for a limited period on specific types of vendor charges (5% reward for purchases at gas stations or drug stores from July to September for example) but are extremely skimpy on other rewards (for example, .01% on other purchases up to $1,000 a month, 1% over that amount) making up for their apparent generosity. I have a friend who carries around about half a dozen cards at all times, each with a piece of tape on it, indicating for what and during what period it should be used. He wears out his wallets frequently.

The best way to avoid the overcharges with which the use of credit cards has universally infected our economy is to pay cash and get a discount for doing so. Some restaurants do this by offering lower priced “specials” but on a cash only basis. Others publish 10% off coupons which specify “cash only.” Some do not accept credit cards at all, and hopefully, their prices are lower. But such generosity seems limited to the restaurant business. Nevertheless, it should not embarrass the customer to ask a merchant if the price for an item would be less if it were a cash sale rather than a credit card transaction.

And from Sid:

BLINK
Sid Bolotin

For a moment we are teenagers in love.
Then bride and groom.
Bursting into parenthood as mommy, daddy.
Suddenly we're in-laws, and
Now, grandma-grandpa.
Nearing the trail's end.
All in the blink of an eye.

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