The Debit Card Hoax
September 29, 2010One of my favorite workshops is our Personal Financial Basics workshop. In this workshop we talk about the fundamental principles of money management, including budgeting, credit and debt, and saving. No matter where I go or what audience I’m speaking to, there is one part of this workshop that always causes a stir: the debit card.
Now what can be so controversial about the debit card? Nothing, unless you make it controversial, and here’s how the conversation typically goes:
Speaker (me): Now, if you want to control your spending, you need to get away from plastic and start using cash.
Participant: I agree. I only use my debit card when I make purchases.
Speaker: Yes, but a debit card is a form of plastic.
Participant: Yes, but it is the same as cash.
Speaker: Really? Then let’s do an experiment. I’m going to reach into my pocket and pull out my debit card while you reach into your pocket and pull out a $20 bill and we’ll trade. How does that sound?
Well, you can see where I’m going with this. At what point did a thin piece of plastic, debit or credit, replace the real, tangible, emotional connection we have with cash. Cash is absolute. We get excited when we see large amounts of it. At no time in my life did I ever get excited about a piece of plastic with a logo on it.
One of my all time favorite commercials is a commercial for the Visa debit card; not because I have some sick fascination with Visa, but because I think it epitomizes how card companies attempt to dupe the average consumer. The commercials went like this:
There are a bunch of people buying things and standing in line to pay at the register. One by one they take out their Visa debit card, swipe it, and move on. There is a nice little ditty playing in the background keeping in time with the swipes. The whole “machine” is working perfectly until someone steps up to the register and attempts to pay with cash. Suddenly, the whole machine comes to a halt. This person who has the audacity to pay with cash has suddenly ruined the day for the rest of the world.
WHAT A JOKE! To think a system that has worked for thousands of years is suddenly incapable of working without the use of a plastic debit card? Give me a break. Here’s the truth about cash and debit cards. The whole problem we find ourselves in today has to do with so many people not being able to control their spending. And a main contributor to this phenomenon is the ease of using things like the debit card to make financial transactions. While using a debit card might be convenient, there are very little controls over how much is actually spent. This problem does not happen with cash. With cash, it is very easy to control how much you spend. Once it’s gone, it’s gone. The reason prior generations did not get into the financial trouble we are in today is in large part due to the fact that they did NOT have debit cards (and by association credit cards) to allow for uncontrolled spending. They simply spent what they had in cash, and when the cash was gone, the spending stopped.
So this is my challenge to you today. It is time to buck the system. Tell Visa that you are proud to pay with cash, because paying with cash is a sign of financial awareness and responsibility. You can use those pesky little plastic cards to even out the kitchen table instead.