POLL: Credit or Debit Cards?

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The biggest place a penny comes into play in my personal, consumer experience is sales taxes. I like it when merchants figure out the price of their goods so that the sum, when tax is added, comes out to a nice, round figure.

And I have to add that I think it's utterly ridiculous that the IRS lets taxpayers charge their taxes on a credit card, when Congress is regularly wrestling with the problem of mounting and overwhelming personal debt. Nothing like feeding the problem.

 

Um, yes, because they are a business and have to pay the people who work at the bank.

No it doesn't. The petrol prices are just rounded up or down to the nearest lowest denomination so it all evens out over time. And, no, people are far too lazy to always order $55.72 of petrol so that they can get 2c free. Getting rid of low value coins is not THAT hard. New Zealand has managed to do it (and is about to do it again) and it has not caused any noticeable issues at all.

Well, in New Zealand they definitely don't. You are right that the merchant pays a fee to the bank for accepting credit card transactions. This is because the merchant benefits from being able to offer their customers this payment option. No way are they forced to accept credit cards because it's a commercial decision whether it is worth it or not. This is the same rationale as to why some places accept Visa but don't accept American Express or Diners. Cards like American Express cost a merchant even more than Visa. This why Visa's advertising raves on about the card being "accepted in more places than American Express". I can't believe that every little shop in the USA accepts credit cards. Surely it would be just too expensive for some of them.

 

Actually there aren't that many "little shops" left in the U.S. There are very few "Ma and Pop's" style stores either. Even local convenience stores are part of massive chains. I guess the biggest difference here is that most Americans still carry cash. Most people I know will not charge something that costs under $10 - they just pay cash. And not having $2-bills isn't really that big of a deal. What's the worst that can possibly happen in terms of getting change? Four $1-bills instead of two $2-bills? That isn't going to make my wallet burst at the seams from being overloaded. Not having a $2-bill isn't any more inconvenient than if we didn't have dimes. Instead of having a 10-cent piece, you'd just get two 5-cent pieces (nickles).

I suppose your point concerning change is valid - that gas prices could just be rounded to the nearest $0.05. Or, more likely, they'll always be rounded up to the next greater $0.05 so the oil companies make more money. I understand that prior to the introduction of the Euro, many European countries had decommissioned a lot of their currency because the base unit was so small it was practically worth nothing - I remember my grandmother telling me how much a Lira was worth in Italy about 15 years ago, and if memory serves my correctly, 1 Lira was worth far less than one penny.

What happens with chlidren who can't get debit/credit cards? What if I want to buy a soda, but I'm only 10, and I want to pay in cash, because the only money I have is the tips from my paper route, and I don't accept tips from debit cards?

 

I remember running around with 1000 lira notes as little kid to buy me some glacé. Indeed, it was aprox. 6 month ago as the Italian finance minister dondemend the Euro for depriving him of the traditional tool for paying government debt: Inflating the indebted sum to zero. Yes, yes, monetary stability has its pitfalls.

In facto, the lira example is more akin to the 1 Dollar bill and not coin. But those considerations don't fit for pound, mark or franc.

But this one is accumulating itself in my wallet. It has to vanish!

Prices like 1.99 and 1.95 are psychological marketing aimed at leaving me with useless change for things I'd probably even would have bought if they had been 2.00.

Edit: Dept? Dept!

[ March 21, 2006, 23:15: Message edited by: Iago ]

 

That's because you've never lived in a world that has more sensible denominations. It was one of the biggest things that annoyed me when I was living in the USA, the inexplicable lack of a $2 denomination.

But companies would never round exclusively up because they would get such bad press, for comparatively little reward. Every company in NZ uses normal rounding (e.g. 0,1,2 = 0 and 3,4,5 = 5). The main people who lose out when we get rid of small change is the charities who benefit when people donate their loose change into charity boxes.

There are two points here:
1) Who is giving the kid tips? I have never ever seen my paper boy to ever give him a tip. Doesn't he get paid any wages? And won't they go direct to his bank account?
2) There will probably always be a role for cash, but I bet that some time in the near future, kids will get limited access debit cards that can be "charged" up by their parents (with say $10) that they can then use to buy small things at the shop.

 

Now those are very good questions. The only times I ever go to an ATM to get out cash are if I have to go out to a restaurant with others and it turns out to be one of those grumpy ones that won't allow you to split the bill on cards, although in the last few years, I have found that most restauarants have seen the light and will divide a group's bill on to separate cards.

As for kids coming to my door, hmmm, not sure. I don't actually remember it happening for a while. Actually, I can't remember the last time a kid came around selling stuff, although I do remember doing that when I was younger. I guess the answer is that they would miss out because I would not have any cash to give them, although I could probably scrounge around a few coins out of a drawer somewhere for them if I looked hard enough.

 

Well, the paper route was just an example. We always tipped our paper boy, but that was back when we still got a paper delivered to the house. Perhaps a better example - I know there are kids in my neighborhood that do things like shovel people's sidewalks or driveways when it snows, or mow people's lawns in the summer, and presumably, they are paid in cash (I was always paid in cash when I did that).

Concerning the $2-bill - yes, there is a $2-bill, but it isn't seen often - Thomas Jefferson is the picture on the front, and I believe a picture depicting the signing of the Declaration of Independence is on the back. The thing is, I don't think the commonplace usage of a $2-bill would eliminate the need for a $1-bill, unless the U.S. also started producing $1-coins to be used in common circulation. Again, $1-coins do exist, but you don't see them very often (I think Eisenhower is on them).

And there is one final aspect here - the cash registers of today don't have the right number of slots for all the different types of currency. In a typical register, you have bill slots for $1, $5, $10, $20, with the 5th slot being used for $50s and $100s. The coin slots below them are for pennies, nickles, dimes, quarters, with the 5th slot being for rolled change. So introducing new denominations of currency would also require people to get new register drawers.

 

The Eisenhower dollar came out in the '70's I believe, and I don't think it's minted any longer. Sometime in the late '80's or early '90's we were graced with the Susan B. Anthony dollar coin, which was much more conveniently sized than the Eisenhower but no more popular. Nowadays we have the gold-colored Sacajawea dollar coin. I get them as change from Post Office vending machines, almost exclusively.

 

That's the least of your worries. The people who operate vending machines have the most work to do. But as I say, we've done it twice in my lifetime and it's a small price to pay for a more convenient monetary system.

 

Indeed,

In my lifetime (which isn't all that long) we've done away with the 1/2p coin and the £1 note, changed the sizes of the 5p, 10p and 50p coins, and added the 20p, £1, £2 and £5 coins (although the latter is legal tender they are limited edition runs for special (mostly royal) occasions and hence extremely rare to find in circulation.

Think of the rest of Europe though, having to change every single vending machine coin counter to suit a whole new currency!