Tuesday, July 3, 2012

Make it Cash For Me in the Cash Versus Credit Question

by Paul Richard - ICFE President

San Diego, CA - A growing number of merchants won't accept cash anymore, including many airlines, which insist you pay by credit card if you want to buy a drink or a sandwich on board. There are also news reports that the U.S. Treasury is printing fewer dollars, as American consumers move towards an all-plastic economy. It is good news for the banks, card companies and other lenders. To add to the cost of banking is the threat of a new one percent transaction tax on all banking activity.

Cash is this writer's preferred method of doing business. No credit cards, no travel cards, no charge accounts and here are some reasons why.

Spend less using cash. Most people are simply willing to spend more when they use credit cards than they do when they use cash. The day-to-day cash spending rates drop. There are far fewer impulse purchases too, because if there is no cash available there will be no splurges.

Cash makes budgeting easy. Draw out a certain amount of cash once a week and budgeting becomes automatic. One thing we all do when spending cash, we count how much is left over after a purchase. Hardly any credit card buyers check their credit available after their purchases.

Reduce indebtedness. Credit cards were originally designed to be used for convenience, however a growing number of card holders now use them to accumulate debt. Using a card for convenience means paying the account in full at the end of the accounting period. Using the cards for debt means consumers will pay a lot more in the end because credit card interest rates are higher than most loans.

Cash makes me think about what I spend and why. Brett Arends, a writer for Smart Money magazine, remembers back when he got his first job, he writes that he started calculating how much everything he spent cost in terms of hours worked. That new CD cost two hours of his time, and so on. It was a good discipline.

Identity theft potential is minimized. Many people worry about handing out a credit card or details every time they make a purchase because of the prevalence of credit and identity thieves. Using cash cuts down on the risk and increases privacy.

Cash helps local people. The cash spent at local merchants and their suppliers is keeping some fellow citizens in work. On the contrary with credit cards, the interest and other fees are helping finance bank executives, their marketing teams and call centers overseas.

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Sent by:

Paul Richard

President - Executive Director

Institute of Consumer Financial Education (ICFE)

About the ICFE:

The Institute of Consumer Financial Education (ICFE) was founded in 1982 by the late Loren Dunton (creator of the Certified Financial Planner (CFP) designation). The ICFE is dedicated to helping consumers of all ages to improve their spending, increase savings and use credit more wisely.

The ICFE is an award winning, nonprofit, consumer education organization that has helped millions of people through its education programs and resources. It publishes the Do-It-Yourself Credit File correction Guide, which is updated annually. The ICFE has distributed over one million Credit/Debit Card Warning Labels and Credit/Debit Card Sleeves world wide.

The ICFE became an official partner with the Department of Defense/Financial Readiness Campaign in June of 2004.The ICFE was an active partner in the California Student Debt Resource Awareness Project (CASDRAP) which resulted in a new web site: (studentdebthelp.org). CASDRAP disbanded in 2010, shortly after the web site project was completed. In 2011 the ICFE assumed the single sponsorship of the (studentdebthelp.org) web site and is now responsible for its content and operation.

The ICFE is also an on-line help for consumers who spend too much. ICFE's spending help was featured in PARADE Magazine in the Intelligence Report section. The money helps and tips are from the ICFE's Money Instruction Book, our course in personal finance.

Visit the ICFE's other web sites at: www.icfe.info and studentdebthelp.org. Both sites helps consumers and students with mending spending, learning about the proper use of credit, budget and expense guidelines, how to set up and implement a spending-plan and also how to access financial education courses and how to teach children about money. Other ICFE services include: Ask Mr. G, a free eNews, and an online resource center for students, parents and educators, plus financial education learning tools and a book store.