Another Reason to Use Cash

A trend that has been occurring in some parts of the country for the past two years is continuing but has had a sharp increase in the past few months. Some gas stations and merchants are charging customers more when paying with credit or debit cards. Some states have passed laws to prohibit charging customers fees: California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, New York, Oklahoma and Texas.

Previously processing fees for credit card and debit card transactions were paid by the merchants now the charge is being passed to customers. This is due to increased charges that merchants have to pay when processing credit and debit card transactions. However, fees for debit card purchases are lower than credit card transactions.

In order to legally charge customers for credit card and debit card processing fees gas stations and merchants have to create two separate pricing offers. This is done by offering a discount when paying with cash but a sign must be displayed that states that a higher price will be charged when paying with credit card or debit card. The increase in this practice is due to the changes implemented in the CARD Act of 2009 that stated credit card issuers can charge a discount to customers who pay with cash.

Visa and MasterCard allow merchants to offer a discount when paying with cash that is lower than the price paid for other forms of payment. Discover allows merchants to charge a fee to customers when using a credit card or debit card. American Express states that merchants cannot accept a credit card or debit card for fees over the normal price of an item.

I noticed this week that the local gas station near my office is now charging more when paying with a credit card or debit card. I visited the gas station yesterday and decided to pay with cash but usually pay with my debit card. I am glad I did because I saved $.10 per gallon saving a total of $.80 yesterday for unleaded (regular) gas. For those who buy mid-grade or premium the cost is even more and can easily cost you anywhere from $1.00 - $5.00 more when paying with credit card or debit card.

Be aware of the rules and regulations that govern businesses as well as the rules and regulations that protect consumers to ensure you are not being taken advantage of. For detailed information on the CARD Act of 2009 visit www.govtrack.us/congress/billtext.xpd?bill=h111-627.

Are You Still Using Checks

I still use checks and according to MSN Money I am one of a few who still do. My first preference is using money orders. Your personal information is passed around as many times as we breathe air during a 24 hour period which puts you at an increased risk for identity theft.

Whole Foods has begun refusing checks as payment in some of their stores and has plans to expand the policy to other stores. Banana Republic also began a no check writing policy that went into effect in the fall of 2009.

I liked it when you had to go to a bank to make transactions and the only means of payment was writing a check or using a credit card. I use electronic transactions such as a debit card or credit card but prefer to pay for items with cash.

I don't like being forced to use a particular payment method such as the automated check system that scans your check and accesses your account immediately. This prompted me to start using money orders again, that way I don't have to worry about anyone accessing my bank account. I don't do online banking and don't setup automated payments.

I know checks are going to be retired but I am holding on for dear life and will continue to use them until I am forced to use another method of payment.

Some consumers are afraid or uncomfortable using ATM and debit cards. Others, are hesitant to use them for fear of becoming a victim of identity theft. I wonder, if those who write checks now will no longer be able to write checks in the future and don't want to use a debit card or credit card, what payment method will banks provide for them? Only time will tell what the future holds.

If you are a check writer like me, write your congressman and request that businesses accept checks as a form of payment. I will be writing my letter right along with you.

Another Reason to Use Cash

Over the Memorial Day Weekend, one million Starbucks customers were overcharged. Those overcharged used their debit cards were charged twice. Their receipts were correct but the money was taken out of customers bank accounts twice. Starbucks has since reimbursed most customers but some customers have not yet been reimbursed.

This event is even more reason why it is so important to verify your bank accounts. The fee for an overdrawn bank account ranges from $29-$35 depending on the bank. Also, you risk the chance of having the overdrawn account reported on your credit report which can lower your credit score. It is better to pay for items with cash instead of using a debit or credit card for everyday purchases. Here are 4 ways to ensure you are not overcharged when using a debit card.

1. Read the agreement. Read the policy agreement for your debit card to determine the course of action if you are overcharged on your account.

2. Reconcile. Verify your bank accounts weekly if not daily. Keep all of your receipts and verify them with your monthly statements to check for errors.

3. Use like a credit card. Use your debit card for occasional purchases or for unexpected expenses.

4. Pay with Cash. Pay for items with cash. You don't have to worry about having an overdrawn account. This also helps you to be more accountable and spend less frequently. There is something about a swiping a card that makes consumers want to spend.