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Cash Amnesia

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Re: Cash Amnesia

#121

Post by hunter2_ »

TheRealPomax wrote: post #79
gruez wrote: post #77

Earlier quoted context omitted.

Not really, because most banks have zero liability policies even though the law doesn't mandate it[1]. That said, the susceptibility to fraud is a fundamental problem with debit cards. When the card gets charged, it's your money that's taken out (or at least put on hold). On a credit card, it's the bank's money. That's an important difference, because even if you get reimbursed for it at the end, you're still without…

> most banks have zero liability policies even though the law doesn't mandate it how is that "not really"? That's "yeah, because"

Saying "banks are shit here because they have zero liability policies" isn't too sensical. Saying "banks are not really shit here because they have zero liability policies" makes decent sense.

Re: Cash Amnesia

#122

Post by sanderjd »

callalex wrote: post #113
sanderjd wrote: post #112

Earlier quoted context omitted.

Without some other changes to the system, like direct consumer banking and fraud protection through the fed, making points illegal would just be a big windfall for credit card companies, as they would remain the most convenient way to pay for things, while being able to keep like 2% more of what they charge merchants.

This is already a completely solved problem in most of the world. They simply cap the fees card companies can collect from merchants by law.

That sounds unlikely to me to be "solved" rather than "a different local maximum". I'm very skeptical that any governments know the single perfect solution to the formula of the precise level of merchant fees that is the best possible solution.

Re: Cash Amnesia

#123

Post by hunter2_ »

gruez wrote: post #78
TheRealPomax wrote: post #24

Earlier quoted context omitted.

When I first moved to North America, the idea that a credit card company was allowed to give people cash back, offer insurance, etc. for using their cards seemed like some bizarroworld "how is this legal" concept. Having lived here for decades, it still is. It's like an alcohol shop rewarding its most alcoholic customers by giving them free booze. And then if you sign up for a new card, or you cancel a card, some ran…

> When I first moved to North America, the idea that a credit card company was allowed to give people cash back, offer insurance, etc. for using their cards seemed like some bizarroworld "how is this legal" concept. Having lived here for decades, it still is. It's like an alcohol shop rewarding its most alcoholic customers by giving them free booze. Should businesses not be allowed to offer perks to their customers i…

Presumably the analogy is between an addictive substance (alcohol) and an addictive behavior (overspending on credit). Each can be used responsibly or not.

Re: Cash Amnesia

#124

Post by Etheryte »

JumpCrisscross wrote: post #118
Etheryte wrote: post #86

Earlier quoted context omitted.

I don't think it's tied that much to age, but rather local culture. For example this mindset is prevalent in Germany and Switzerland to the point where many locals look at you weird when you ask them why they prefer cash. (There are other historical reasons here too, but that doesn't take away from the main point.)

> when you ask them why they prefer cash Would they also say they spend cash more loosely than card? That's the phenomenon being described, not absolute preference.

In the conversations I've had with people from Germany and Switzerland it's the other way around, with cash they're more aware and thus more frugal with their spending.

Re: Cash Amnesia

#125

Post by JumpCrisscross »

Etheryte wrote: post #124
JumpCrisscross wrote: post #118

Earlier quoted context omitted.

> when you ask them why they prefer cash Would they also say they spend cash more loosely than card? That's the phenomenon being described, not absolute preference.

In the conversations I've had with people from Germany and Switzerland it's the other way around, with cash they're more aware and thus more frugal with their spending.

Right. That’s what the article says. OP described an opposite reaction which I share. The hypothesis of local culture doesn’t work because the cultures you named align with the paper, which seems to be the default tendency worldwide.

Re: Cash Amnesia

#126

Post by Symbiote »

chrismcb wrote: post #58
MyNameIsRansom wrote: post #28

Lots of small businesses do "cash no tax". It's not forgotten when it's spent. I've fixed my car in cash (primarily to save on tax; and to not have it known by insurance). It's hard for one to "amnesia" $5000 in cash. It's a tool, just like a credit card.

I've never seen anyone do this. But, unless the small business is committing fraud, they are then eating the tax. I don't a small business is going to willing pay 10% (or whatever the tax is)

I sometimes saw my dad doing this in Britain, where it is certainly tax evasion. He'd ask the price of a service, then ask if there was a discount for "cash in hand". Occasionally, I think tradesmen would offer both prices upfront, or say "will you be needing a receipt?".

It would have been a 15% discount for my dad (VAT was 17.5%), and probably a slightly larger saving for the tradesman, although they have a higher penalty if somehow caught. I think it was usually done for small jobs, like minor plumbing fixes.

I have no idea how common this was in the 1990s, or how common it is now.

Re: Cash Amnesia

#127

Post by OkayPhysicist »

wing-_-nuts wrote: post #95
bern4444 wrote: post #80

I've always thought the opposite. When I pay for something with cash I remember it far more strongly than when I pay with card. I pay with a card all the time and the action is the same no matter the price. I tap it and move on. With cash I remember having to go get the cash, counting out the right amount at the register, and physically handing it over. And then I notice its absence since now I gave up all the cash I…

I'll say this, spending cash is harder in the moment . There's a real visceral feeling of loss when handing over actual cash vs card. However, when it comes to tracking long term? Cash always seemed to just ...evaporate, out of my wallet where as I can look back and see my credit card purchases and go 'why did I spend that much on that?!' In my experience, there are two types of people when it comes to money. There a…

I definitely feel the "frugality has no chill" attitude. I describe it, charitably, as being an extremely content person. The downside is that there are plenty of things that I could point at that would make my life somewhat better ( replacing my 30 year old Honda with a Tesla or something would definitely save me time on maintenance, for example). The upside is that when something does pass my high bar of "willing to spend money on it", I rarely have to worry about being able to afford it.

Re: Cash Amnesia

#128

Post by matsemann »

magicalhippo wrote: post #91
bern4444 wrote: post #80

I've always thought the opposite. When I pay for something with cash I remember it far more strongly than when I pay with card. I pay with a card all the time and the action is the same no matter the price. I tap it and move on. With cash I remember having to go get the cash, counting out the right amount at the register, and physically handing it over. And then I notice its absence since now I gave up all the cash I…

I'm from Norway, where cash is rare these days. But I feel similar, it's a lot more obvious how much you pay when you need to count bills and hand them over. As a compromise I only keep a small amount of money on my debit card. That way I have to keep topping it up, so I get a sense of my spending that way.

Also from Norway. Haven't paid cash in ~10 years. I have no idea how the new currency looks like. I lost my wallet at some point, and just never replaced it. I pay with my Garmin watch (or phone once in a while). My driver's license is an app.

Re: Cash Amnesia

#129

Post by lazide »

em-bee wrote: post #110
bombcar wrote: post #101

Earlier quoted context omitted.

This is it exactly - if I spend $2k on an item, I'm going to remember that if it was cash or card, but only card tells me "you spend $2k last month at Walmart".

so the benefit is that paying by card makes tracking your expenses easier. but the downside is that it also makes makes profiling easier for anyone who can get access to your bank statements which not only includes the bank but more critically also walmart or any other place where you shop regularly. i rather track my spending manually. there are tools that can help with that too, like receipt scanners. granted, it's…

The challenge of course, is it's easy to lose or misplace receipts, etc.

Some of us have issues with (essentially) self sabotage that way. Some of us have also had issues with people in our lives not so accidentally sabotaging (or stealing) things that way. Come to think of it, I don't know any long term married couples that didn't have one of the two do SOMETHING like that at some point.

The nice thing (or terrible, if you're worried about privacy) about credit cards is you can go back as long as you need and figure out what money went where, from whom.

When cash is gone, it's gone. If someone has to provide receipts/prove expenses to get more, that can be managed. If someone can just pull it out, less so.

Pros and cons either way, of course.

Re: Cash Amnesia

#130

Post by CuriouslyC »

nfriedly wrote: post #103
tracker1 wrote: post #100

Earlier quoted context omitted.

I definitely favor using CC, and paying off if only for the 2-5% "cash back" program(s). If I pay cash, I'm effectively paying extra, same for debit. It kind of sucks, and definitely should be better managed. Also, if you let the debt accumulate on a CC (very easy to do), then the interest definitely comes out to more than the rewards in that case.

Oh, yeah, CC companies love it when people carry a balance and pay interest. But they're still making money off of someone like me who pays the full balance off each month, because when they give me 2% back, they're charging the merchant 5% or more. It's kind of a heads-they-win, tails-you-loose situation.

5% processing fees are predatory, and the only people that pay them are mom and pop shops that don't have leverage. Larger merchants are going to be closer to ~1.5%.
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