I got more cash than usual on my visit to the bank yesterday. This month, I have resolved to pay for most of my in-person purchases in cash.
Two years ago, in June 2009, I spent a month where I tried to pay for everything in cash. It didn’t entirely work. Some of the things I wanted to purchase weren’t easily available in local stores. Paying for gasoline purchases in cash was far more work than paying at the pump with a card. Paying in cash requires a higher level of mindfulness and record-keeping that I couldn’t always manage.
My objective then was to see how someone might do without a credit card. Credit cards, which had dominated the American commercial landscape since the early 1980s, were just beginning to lose their luster in 2009. In the two years since, the average consumer has switched from credit cards to debit cards. Now with banks imposing new fees on debit cards, some consumers are making the switch to cash. I never got a debit card myself, but I can see the point in the switch to cash.
When you pay for a purchase in cash, the entire amount you pay goes to the seller. By contrast, when you pay with a card, the bank keeps a transaction fee and pays only perhaps 98 percent of the purchase to the merchant. This isn’t a pure financial gain for the retailer — when you pay in cash, the retailer has to pay a cashier to count the money, which is itself a form of work and an expense for the retailer. A cash transaction is still a smaller expense than an electronic clearinghouse transaction. When people pay in cash, the result is more jobs for cashiers and fewer retail stores closing. At this point, both effects would be good for the economy.
The gains from paying in cash are negated if you have to drive to the bank more often. Paying ATM fees to make cash withdrawals also largely defeats the purpose of paying in cash. It takes a kind of planning — you can call it cash management — to use cash efficiently. Before about 1972, this was a skill that was second nature to everyone in a cash-oriented commercial culture. It is a skill that I now want to relearn.