Cash or Credit

Photo by Thought Catalog on Unsplash

For a long time, I’ve held two contradictory opinions simultaneously. One is that credit card companies are about the most evil things on the planet and everyone should stop using credit cards. The other is that no store should be cash only. They should all accept credit cards. My opinions are changing (at least one of them) and I want to explore that a bit.

The evil of credit card companies is beyond doubt. They are exploitive, usurious, and have financially crippled millions. They seek out and target the young and marginalized. Plus, they are a major component of the credit industry. I’ve written before that, “Credit is probably the biggest scam in human history.” I explain myself there, so I won’t repeat it. It boils down to most people would be better off without large debts, but credit cards try their hardest to sink everyone in ever deeper debt.

Given what I think of credit cards and credit in general, why did I ever think that all stores should accept them? There are a few parts to that. One is just being unreflective about it. I was suckered in by the convenience of having options. I didn’t like a store making me stop and get cash. And the ones that had an ATM on premises were worse with the ATM fees. Another is that I worked in anti-money laundering for many years. Cash only businesses are a huge red flag in the anti-money laundering world (not to mention tax evasion and other forms of fraud). My time in the business made me suspicious of any cash intensive enterprise. Third, I believed, perhaps naively, the safety arguments. It’s dangerous to carry cash. You can get robbed. Credit cards have theft protection. And there’s a record of credit card purchases if something goes wrong.

My thinking has changed along with circumstances. For starters, I seem to be less lazy as I get older. Convenience is not nearly as important to me as it once was. I actually think a bit of inconvenience is a good thing as it discourages irresponsible impulse buys. Cash intensive organizations are still a money laundering threat, but they certainly aren’t the only ones. Preloaded gift-cards, insurance policies, CDs, REITs, almost any financial instrument can be used to launder money. I don’t think boycotting cash only businesses will make any difference. The safety issue has flipped, too. I’m not recommending keeping thousands of dollars on your person all the time, but I’m much more afraid of identity theft than someone stealing my wallet now. I’ve lost track of how many businesses have been hacked and offered me “free” credit monitoring to make up for it.

Beyond these changes, there are more options now than there were before. It used to be (mainly) cash or credit or check. Now there are debit cards, direct transfers, crypto, and apps like Venmo, PayPal, and Cash App. So, a lot of the convenience and protection of credit cards can be gotten in other ways. There is good and bad with all of them. The apps like to charge a fee for immediate access to the funds, for example. But, at least so far, the new options seem to be less evil than credit cards.

Personally, I still like cash. It can’t be hacked or traced. It gives me an easy way to budget myself. And it cuts out a middle-man. I prefer to transact business directly with the seller. With a credit card, or Venmo, the seller and the buyer are both interacting with a third party. It’s one of many inefficiencies in the modern economy that raises prices and enriches the already rich at minimal benefit to us.

Of course, eliminating credit cards, or at least rebalancing towards a cash economy, is only a step in the right direction. Many of the issues that come with credit cards, and cash only places, will persist as long as money remains our primary economic tool. But, a step is a start. Let’s get moving.

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