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And then there were two

Credit instead of cash and carry

Ever wanted a Coke but had no coins for the vending machine?

What about one of those that takes a dollar bill? You fished around for the newest, crispest one you had, but the dang feeder kept spitting it back at you.

If you have a credit card, and who doesn't these days, your soda crisis might soon be over. Or maybe not.

In the latest move to make us a cashless society, MasterCard and a Coca-Cola bottling company have just rolled out 1,000 vending machines in the Philadelphia area that accept, in addition to cash, credit and debit cards. (There's a story in today's Chicago Tribune, free registration required. Or you can read a preview of the deal without signing up at ContactlessNews.com.)

But even though Americans are a charge-happy lot, getting us to give up our cash for what the credit card industry calls micropurchases apparently is not that easy.

Credit_card_vending_machine A quick online search of credit card vending machines turned up reports of this "coming trend" from a while back. Pepsi installed similar machines in a few cities several years ago. And an October 2002 report enthusiastically told readers four years ago that,

"The vending industry has seen a significant growth in cashless transactions over the past two years, with announcements from major beverage and consumer product companies and vending machine manufacturers, which are incorporating credit cards payment systems as a necessary consumer payment option. A CBS Market Watch report announced that the major bottling companies plan to add credit card payment systems to their vast network of vending machines."

I've yet to actually see one of these machines, although I'd dearly love to. I am a big advocate of the cashless society. No paper bills, regardless of how pretty the U.S. Treasury makes them.

No pennies or nickels or dimes either. Maybe we keep those commemorative state quarters, but for show only.

Heck, I’d gladly get rid of my checkbook, too. It's of little use now that Check 21 has eliminated the float we used to get between the writing, mailing and actual posting of a check.

The only check I write now is to the local water company, our only creditor that doesn't offer online bill payment. I could, though, pay that bill with my Visa or MasterCard. I already charge other necessities, like my weekly grocery purchases or gasoline when the car needs fuel.

Speedpass Creative credit payments: When it comes to filling up my car, I'd prefer to use my ExxonMobil Speedpass, but there's not a station nearby. Plus, that oil giant's fuel isn't as cheap as some others, so it wouldn't do me much good anyway. But I do so love just touching that little piece of plastic to the pump and watching it crank up.

The same radio frequency charge technology (RFID) is being used in some fast food markets. Speedpass was tested at Chicago-area McDonald's, for example, to let folks buy a different type of gas.

Some cities are installing card-reading parking meters and bus fare machines.

And the credit card companies have been working for years on ways to let us use our cell phones (and other gadgets) to charge whatever we want.

Again, I'm all for these advances. If all I ever need to carry is my cell phone and car keys, or a tiny piece of plastic hanging on my key chain, then I'll be a truly happy camper.

Credit convenience or crisis? While all these electronic payment developments can make our lives easier, there is a downside to more and easier ways to charge. If you're not a good manager of your money, be it in your bank or on a credit account, you could run yourself into a very deep financial hole.

Take, for instance, the charging of basic necessities. I've had people marvel that I routinely charge my groceries. They couldn't do it, they tell me, or they'd never get their credit card paid off.

I have couple of questions for them, starting with, "Why not?" Followed by, "Why aren't you paying off the card each month anyway?" Finally, if you're managing your credit wisely, "What difference do the grocery purchases make?"

Since you already write checks for your bread and milk and bologna, then it's just a matter of letting that money sit in your bank account (and maybe earn a tiny bit more interest) for a while longer until the card statement arrives. Then you just send it as one payment, instead of three or four weekly grocery store checks, to the credit card company.

The key, as in all credit card purchases, is to pay the account in full so you don't run up any interest charges. Look at it as sort of a loan consolidation process for all your required living expenses.

If you're afraid you'll overload or tie up too much of your credit limit on your favorite card, consider getting a no-fee piece of plastic that you use only to buy groceries and/or pay utilities or other day-to-day expenses.

And charging these items in a responsible manner could actually work in your favor. Depending on your billing cycle and the date of your purchases, you'll get back some of that float you lost when banks started immediately clearing the checks you write, but not the ones you deposit ... But that's a topic for another day.

Comments

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credit card owner

Credit card transactions are more convinient for both consumers and merchants. Of course, it raises the prices but for all the consumers, not for those who use credit cards. Actually, the system works the way that cash-payers subsidise those paying with credit cards.

Kay

Point taken on the costs to businesses to handle credit card transactions. But I don't believe that these surcharges are a major contributor to higher prices.

Wal-Mart, reputed master of low pricing, takes credit cards and still reportedly manages to "always" offer the lowest prices.

And every non-cash transaction has a price, e.g., banks that charge check writing and processing fees.

True, cash is the only surefire way to avoid all the ancillary costs, but I know I'm not going to be walking around with a wad of money in my pocket or purse.

We all pay for convenience in some form or fashion, and to me the ease of using plastic is a price I'm willing to pay.

Stubbs

The charges to retailers for credit card purchases raise the price of everything purchased, and if you use cash, you subsidize these totally out of line charges without any benefit. (I believe that the charge for processing credit card purchases can be in the 6% realm.)

Credit cards thus cost more than is rational to support, and paying the total bill every month does not prevent this surcharge on your purchases. It is lunatic to use a credit card.

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