Reader Dan thought we’d be interested in this sign he spotted in his local Home Depot. It reads: “Why pay cash even if you could?”
While we do recommend you pay for large purchases with a credit card and then pay it off immediately in order to take advantage of the credit card’s various warranty/ purchase protection benefits, we sort of suspect that Home Depot is suggesting something else.
So how about you answer Home Depot’s question in the comments. What are the benefits of paying cash?
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@forgottenpassword: Got a brand new Chrysler Sebring in April that way.
Salesman: So let’s talk financing.
Me: No need. Just let me run down to the bank and make a withdrawal. That should give you enough time to have it detailed by the time I get back.
They were pissed. 9k off sticker, plus no financing. Epic.
@ignar:
“Credit cards are generally safer, transactions are trackable, you get benefits such as price protection, warranty extension, rewards, and you earn more interest since your cash will stay in your savings account for longer time.”
But don’t you get the some of the same benefits from using a debit card too? And, I would submit to you, the interest you get in a savings account is pretty small. If you wanted to make money by using a credit card instead of savings, it would make more sense to invest it in a money market account.
I honestly don’t understand the whole “use a credit card and pay it off at the end of the month” thing. From a financial point of view, it’s the same thing as using cash, so why not simplify and use cash?
Cheers!
Why insert a middle-man with a 3% fee into the transaction, when you could just as easily do without that? Yeah I know it’s not my money, but I also don’t go into the Home Depot bathrooms and flush all their toilets 7 times just because it’s not my water.
Well, think about it logically. Is the store suggesting this altruistically, thinking only of you and your best interests? Or is it more likely that what they’re suggesting is better for them in the big picture, that they make more money off of store purchases when people finance them via their store credit card?
One of them seems much more likely, doesn’t it?
@SinisterMatt: It is my understanding that with many debit cards, you do NOT get the same protections as you do when you use a conventional credit card. You can’t do a chargeback, for one, with a debit card. I’m pretty sure you don’t get a lot of the other buyer protections with a debit card, either.
@Erwos:
Not all CC companies will drop all fraudulent charges, same goes for your bank-issued debit card. Then you have the stores themselves sending the collection agencies after you because “you” didn’t pay for the $10k worth of computers they sold to “you”.
Personally, I use a paypal debit card with only $100 on it. If someone takes that, they don’t have access to my entire bank account as they would with a debit card, and I don’t have to spend thousands in legal fees to fight the ensuing lawsuits from overambitious collection agencies.
@DWalk: Spot on.
how about, because I can pay for it ONCE and be done with the transaction instead of taking on the risk of having to pay the bill again in exchange for some fake benefit.
They want you to finance.
No company wants credit cards. They suck since there’s transaction fees.
They would rather you pay cash… they then get to pocket the transaction fee.
That can be 3% extra money.
@Stavro Mueller: Every credit card company is legally required to drop fraudulent charges over $50 if reported within 60 days of the receipt of the bill. It’s a provision in the Fair Credit Billing Act. Unfortunately, it only covers credit cards, not debit cards, which is why debit cards are evil.
I paid cash for a $2000+ Tv at Sams in all twenties. Yes I was that guy. The bad thing is I returned a TV to Costco and they paid me in twenties. Easy come easy go.
Oh BTW I have no credit cards and pay with cash and Debit cards.
@Sudonum: buying a car with cash is a surefire way to get your own FBI file.
@SinisterMatt: “I honestly don’t understand the whole “use a credit card and pay it off at the end of the month” thing. From a financial point of view, it’s the same thing as using cash, so why not simplify and use cash?” No, it’s not the same as using cash. You’re not out the amount if robbed, and if you use a rewards card, you can get cashback. That’s what we happy CC users do. And no, we don’t spend because we get cashback, we just put the purchase we would have made anyway on a more financially advantageous method of payment.
Another reason: So you can give the cashier extra change after she’s punched in the total amount you already gave her. “Oh- it was $5.39? Let me give you $11.74 so you don’t have to give me back an odd number of bills.” And then watch the confusion.
Seems to me they have an employee with a subversive sense of humor, or some guy decided to put up that note as a joke.
@Saeculorum: That doesn’t stop retailers from coming after you directly, bypassing the CC company altogether. It may be illegal, but since when have laws stopped megacorporations from doing what they want.
To all those Consumerist fans that pay for “everything” with credit cards, there’s a little something you need to know. The credit card companies LOOOVE when you pay for everything with CC’s. This allow them to raise your interest rate. Why, you ask? Well, they take it upon themselves to think that you may have a big, not registered debt. And this is what makes you pay for everything else with CCs. Care to guess what they give you as an award for this? Yeap, you’re right, an increased interest rate! So, do you still think is a good idea to pay everything with credit cards?
I usually never carry cash and rock the debit card. I’m thinking about switching to mostly cash though. This is only supporting my urge to switch.
I blame Office Depot moles, trying to pay for everything in pennies. (And here I thought the point of viral ads was that we weren’t SUPPOSED to be told they were ads. Silly me.)
@Aisley:
If you’ve been paying attention, most of those Consumerist readers also PAY OFF their credit cards every month so there is no interest to pay. That’s kind of a recurring theme at this site, pay with your CC to get the benefits and pay the bill in full every month to avoid the interest.
@Sudonum:
And I forgot the most important part, if you can’t pay the bill off at the end of the month, then you can’t afford the item.
Yea, Why pay cash when you can take advantage of credit, not pay, and then go to collections at the default APR! YAY!
The Home Depot is currently in distress at least up here in Canada. There has been quite alot of push down from the top to push credit cards on customers as apparently, if you have the card in your wallet, you will use it.
They’ve even gone as far as to call customers who have a credit card and haven’t used it to remind them that they have the card.
@redsox: Just another reason I avoid Home Depot like the plague.
I rarely use cash and don’t use a credit card, but I do use my debit card. It’s just more convenient to me. What’s the point of going to an ATM to withdraw cash to hand it over in a store? You can just use the same card in store and save time. Also, if I take out 10 bucks and buy something at 5, then I’m more tempted to use the change I have instead of spending the exact amount on card. As for overdraft fees on your card, it seems odd to me that people would go out to buy something and not ever know what they have in their account.
When a corporation wants you to do something, it’s time to do the exact opposite.
@forgottenpassword: You mean you don’t buy your mansions with sacks of pennies carried by your servants?
This is stuck on the door of a GE profile oven. It frightens me that I know this… That said, paying with cash is not always a great idea:
1. Many stores do not offer a cash-back form of refund over a certain amount. You’ll have your money in limbo waiting for a check in the mail;
2. If you lose your receipt, a cash transaction is difficult to trace and sometimes impossible, so if you need to return the item, you may be SOL;
3. Zero possibility of getting a chargeback in case of issues;
However, stores get kickbacks for credit card sign-ups from the issuing bank, and many save the checklane tender they would have otherwise paid Visa or Mastercard, i.e. the Home Depot card doesn’t cost HD anything when it’s used as tender, but your CapitalOne card costs them 3%.
Financing can be great if you use it wisely…
Home Depot is the only store credit card I have, and it’s been pretty well-worth having. No interest for a year on our countertops meant we could keep that money in the savings account for an extra year. They’ve also sent us a lot of coupons in the mail, usually $10-50 off a purchase of however much, and since we’re always needing things from there it’s saved us a good deal of money.
But gosh, yesterday at Kohl’s we were checking out and the cashier wanted us to get their credit card, but we rarely shop there so naturally we said “no, thanks.” Then, when my wife swiped her card to pay, the card-reader thing asked for her social! The cashier acted as if it were a natural part of the transaction, but when we offendedly refused she pushed some button to skip it. I’m not sure how subtle they could make a credit-card signup, but wow that felt sleazy.
cash: always runs out when I need it. I dont have time to go the ATM every day, nor the idiocy store hundreds in my apt.
CC: I dont like doing the math; how much is on my cc? how much in my bank? when is my cc bill due?
debit card is the way to go. I can check online and see exactly how much I have left.
also, I am GLAD someone at home depot has a dark sense of humor about the economy. I thought it was actually pretty funny.
“..the idiocy TO store..”. Or proofread, apparently.
If it’s an emergency or something and you cannot flat out afford it then consider credit but if you are buying on whim like that’s cool or I gotta have that then you are done.
Too me over use of credit can cause INFLATION,PRIME example is the housing bubble-easy credit prices go up hard credit the prices go down.You whip out the plastic and sign you just contributed to inflation.
I must of missed it but what item is that sign on?
@Saeculorum: In this state debit cards are afforded the same fraud protection that credit cards do, meaning you can chargeback anything over $50.
Massachusetts, if you’re curious.
@redkamel: How much is on your CC? Go online and check. Ditto for your bank balance. What’s your due date? The same day each month – and you get to pick when you want your due date.
You make it sound like you’re a little cavalier with your debit card, having to go check your balance to see how much you have left. Sounds like you need to get a budget together.
My husband and I put EVERYTHING we buy (even a $2 item) and some everyday bills (phone, internet service, car insurance, etc.) on our Chase Visa card, then pay the entire bill every month so we do not pay any interest.
Our Chase Visa card offers from 1% to 5% back to us on items purchased as CREDIT, not debit. The 5% rate includes gas, pharmacy, and particular stores that count for triple points. Every month we have enough points to receive a $100 check (sometimes more). That’s $1,200 (or more) in cash per year! Nothing to sneeze at.