Part 1 – Debit, Credit, or Cash?

Small merchants (a cafe, and a small grocery store) on my street will not take debit or credit cards if you buy for less than $5. That’s because they’ll loose money on the transaction (i.e. what they have to pay the bank is well above their profit margin). This morning I asked the man at the cafe what the transaction cost was. He said it was $0.65 or thereabout, which surprised me because it was higher than I thought. It’s higher than, say, Paypal, because they have to set up the devices there at the register.

So my recommendation here is: avoid using cards whenever you can, especially at small independent merchants. Help them survive.

That is less the case for big chain stores that just want you to be hooked, and set their prices to afford a higher margin. They may even be more concerned about taking cash because they’re easily the target for robberies and petty thefts. In that way, airlines stopped taking cash just because they didn’t want to pay people to count money and bring it to the bank. So yes, when buying from the big ones, it really doesn’t matter because you’re already in the big impersonal corporate world.

I’ve seen people using debit cards at grocery stores for $1 purchases just so they could get “cash back” without paying the ATM fee. That’s very nice for them, but not for the merchant. But again, it doesn’t matter when it’s at a big corporate chain.

I have a bank account from a small local bank that pays for ATM fees at other banks. But if you go to a big bank’s ATM, you’re just transferring the wealth to the big bank. Instead, I look for those little ATM machines at cafes and restaurants, because (a) the fees seem to be less than at a bank, and (b) part of the fees go to the small merchant hosting the machine.

Another reason it’s better to use cash than credit or debit: the transaction will not be recorded to be used to target you with Marketing. Mostly with chain stores, you’ll be associated with the items you purchased. This all gets in the wash of figuring out your vulnerability to Marketing and Advertising. Then it will be very easy to make you buy products you don’t really need. And remember the Patriot Act? The government gave itself the right to request the information.

All this gets even worse when you make purchases online. Yeah, it’s convenient, but you’re giving up a lot of your freedom by doing so, in addition to starving your region of sales tax revenue.

But, you will say, it’s convenient! Yes, it is. Just know that convenience has a price. Nothing is free, and you’re not free if you blindly respond to convenience.