Going Cardless, Misleading Deals and More Reader Questions

Dear Cheapskate: I hardly ever carry cash and rarely use credit. I use only a debit card. But still, there are times I feel out of control. How can I get some control over my spending? — Rob K., Nebraska

Dear Rob: Merchant research groups have proven it over and again: Customers who shop with plastic spend about 30% more than those paying with cash. I believe that’s because credit and debit cards (even checks) are stand-ins for our money. They’re not the real thing, but more like “play money.”

I know for myself that swiping a card or writing a check for, say, a $50 purchase doesn’t require the same kind of mental consideration as paying with cash. It’s painful to part with cash.

I suggest you put yourself on a cash-only diet for the next 30 days. Don’t even carry a checkbook or plastic — debit or credit. Except for payments you must send through the mail, force yourself to pay with cash. You bet it’s inconvenient, and you must plan ahead for how much cash you’ll need for the day. Keep a written record of how you spend every penny, too.

While making the switch to cash will be quite an adjustment in the beginning, I predict your mindless spending will disappear.

Dear Cheapskate: There are several appliance, electronic, and furniture stores in our area that run television commercials offering no money down, no payments, and no interest until 2026. It sounds like I can just walk in and take what I want and not pay for two years. How do these companies really make money? — Kate B., Iowa

Dear Kate: First, these offers are on approved credit and come with a lot of fine print. It takes pristine credit to qualify for those attractive terms. One retailer told me only about 25% of the people who apply for the “amazing offer” qualify. The other 75% are offered some other deal with horrible terms, which they usually accept because by that time, they’re emotionally involved and have their hearts set on that “free” big screen TV.

Let’s say you’re one of the 75%. You have $3,000 sitting in the bank. You could pay cash for that TV, but you decide to go for the nothing down deal so you can earn interest on your money until 2026. (Not sure how .01% APR would earn you anything, but still, we tend to believe it’s honorable.) You still have to fill out a credit application, and that requires a credit check. You still have to agree to very steep interest (such as 29.99% or more), which is deferred, NOT waived, until 2026. De

The contract will read that if you are late paying that balance in full at an appointed time on a certain day, you lose your deferment, and you owe interest back to the day you signed the contract. And you must start making BIG payments.

Here’s the ugly truth: About 78% of the people who qualify for these deals do not pay the account in full at the appointed time for whatever reason — some emergency came up, they discover another child on the way, big auto repairs — because life happens! That means they’re now stuck with enormous payments, plus all the deferred interest on something that’s now two years old.

My advice? Don’t even think about these kinds of come-ons. If you can afford it, pay for it in full. Can’t afford it? Then make payments to yourself until you save the full amount. Discipline and delayed gratification are still excellent character builders.