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November 26, 2007


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Let's face it--assuming the merchant is above board with the IRS and not carrying the financing in-house, from their point of view, cash vs. credit will never be more than the ~2% or so transaction fee they're paying for credit card processing.

The huge discounts the commenter cited--presumably because they were paying in cash--are frankly more symptomatic of a merchant hungry to make a sale. We drive 40 miles or so from our home to go antiquing where we can find an area with a lot of antique stores, and we casually let the merchant know that before negotiating.

While it makes for good theatrics, it's not the waving of currency under the retailer's nose that draws their attention, it's the very real possibility that you're going to get in your car and not be in their area (let alone their store) again for months...or ever.

When I bought my house, I paid all in cash with no mortgage, even though our bid was lower than the other buyer, we got the deal, however.

What this reveals to me is the power of being willing to walk away from the table.

Hey look. My comment made a post. I've finally made it. It's true, I use cash at any place that will take it, if nothing else you'll save yourself money because it hurts to bring out those twenties to buy that LCD tv you just "had" to have. I do realize crazy things happen on black friday, and no I don't want you to get mugged while you're waiving your fat wad of cash around.

[PS] I have a lcd tv and I paid for it with cash and got a smokin deal on it. And it did hurt when those twenties left my hand.


To your home's seller, you got the edge as a cash buyer because of the financing contingency that likely came with the higher bidder's contract. These days, it's not a given that the buyer will be able to get financing as it was a couple of years ago. Ask any real estate professional how many settlements have been delayed or canceled in the last few months because the mortgage money didn't materialize.

Cash vs. credit is an entirely different animal when you're talking about a $250,000 house than when you're talking about a $400 chest of drawers.

Makes sense in some cases but not others. Sure some small merchants or contractors may give a nice discount with cash, and it makes sense to take it..

On the other hand, I choose to pay for my LCD TV with AmEx. I got a great deal on amazon, better than I could find in any local retailer, $600 less than in Costco. Additionally, with their free Eagle delivery, I got it unpacked and setup in my home for free. The thing is way too heavy for me to lift so the fact that some guy came and put it on top of my TV stand is a big plus. Additionally, unless I am mistaken AmEx doubles the manufacturer warranty. And if I were to have problems, I could've just called the card and refused to pay.

BTW - it did hurt to pay for it with credit card too, and it hurt even more to look at the bill and see how much will be taken from my checking at the end of November. Especially since it was unplanned as my 10-year old TV stopped working; I did hope to get another year out of it. Too many expenses this November and December - I am remodeling the shower (the old one leaks), my 10-year old TV stopped working, my microwave stopped working, and my stocks go down every day. Lost several times more than the TV is worth on the stock market, and that not counting 401K (don't even bother to look).

By the way, I care a whole lot less about twenties than about the written amount on the bill. Twenties are already out of my account and hence already spent. The amount I am putting my signature under is something to be taken from the account.

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