On Consumerism: Buying Time And Other Thoughts On Credit Cards Weekend magazine


Until I was about 7 years old, I worriedly asked my parents if we had enough money to pay for everything we took to the till to call. Sometimes they said to me, “Don’t worry, we’ll charge it. But they never explained the concept.

For a young person, this can be confusing. It’s like having this magic rectangular piece of plastic means you don’t have to pay.

But boy oh boy, that’s not what that means.

By the age of 8, I understood. Charging just means you don’t pay now, on the spot. But you always end up paying. In full.

Over the past few years, I’ve started noticing that there are times when using a credit card means you end up paying more than the full price.

For example, at the clerk’s office in Claremont, where I pay municipal bills, a sign informs payers that 2.79% will be added to their bill if payment is made by credit card.

I don’t blame the city. If a credit card company criticizes the merchant for being the middleman in the use of credit cards, the merchant should be allowed to require the buyer to share (or fully assume) the burden of these. costs. As long as all is well, no problem.

Just be aware that if you have an annual property tax of $ 5,000 and still charge the payment, then you are paying an additional $ 139.50 per year for the lien.

This summer we had a new oil-fired steam boiler installed in our house. The old one, dating from Eisenhower’s presidency, had become unreliable, requiring extensive maintenance each summer to last for another season. It took a decade, but we finally saved enough for a new system. They are expensive. Like buying a slightly used car.

Just as today’s cars offer better miles per gallon than cars of the 1950s, newer oil heaters are likely to create more heat per gallon.

At the bottom of the heating company bill, in bold capital letters, was this sentence: Please add 3% to your bill if paying by credit card.

By highlighting this phrase on the invoice, the company made it clear in advance. Otherwise, many people would mindlessly press computer buttons and enter their card number without realizing that the amount charged was more than the amount owed.

I had considered billing this invoice. Frankly, I wanted the extra time that charging would save me.

Every credit card has a monthly cycle, which is usually not a calendar month. For example, our credit card cycle is 15-14. Our most recent credit card bill, which was due October 14th, contained a debit made on September 13th. In this case, the debit allowed us a full month and a day before to pay for the service provided. However, an expensive root canal treatment on September 16 was also billed. This will not appear until the next monthly bill arrives, in the second half of October, and will have a due date of November 14; in this case, the charge earns us nearly two additional months to pay for the service.

If you have more than one credit card, take the time to find out the monthly billing cycle for each card. By choosing carefully which card to use, you can save extra time paying off debt.

In general, I don’t like to use credit cards. I prefer to pay cash or by check and be done with it. I think if you don’t have the money to pay it now then maybe you can’t afford it. But for necessities (like root canals and heating systems), that extra time to pay makes a credit card very attractive.

The heating system, with installation and removal of the old system, cost $ 12,550. In states with sales tax, you can expect an additional $ 1,000 and change on top of that. If I were to charge it, let’s see… 3% more would mean $ 376.50 more. About $ 400 more if the state had a sales tax.

I’d rather not spend $ 376 or $ 400 more than necessary. So I arranged to put the money in the bank and wrote a check for $ 12,550. I am not saving time on this purchase. The price would be too high.

On the other hand, back at the endodontist specializing in root canal treatment, because we approved the fees before leaving the building, we received a 3% discount. Which, when applied to a $ 1,719 root canal, means savings of $ 51.57.

We would also have received a discount using a check or cash. The discount was to pay right away. Your immediate payment means the service provider doesn’t have to worry about finding you and getting paid later. For many service providers, such certainty of payment is worth the discount offered.

So sometimes you are penalized for the charge. Sometimes you are rewarded. At the very least, recharging can save you time.

But if the time bought still doesn’t allow you to pay in full, then maybe you are buying something that you can’t afford.

Arthur Vidro is one of the Eagle Times’ recurring financial columnists. His “EQMM Goes to College” appeared in the May / June 2021 issue of Ellery Queen’s Mystery magazine.

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