Cash or Card?

“Either way at no extra charge,” says the flyer from the Credit Card Association of the Philippines that came in together with my card bill. They say that:

• Surcharging or additional charges when paying using a credit card is PROHIBITED
• Each product or service being sold must display only ONE price tag
• The price indicated on the price tag should be VAT INCLUSIVE

Yeah, right.

• To go around this “no surcharge” rule, stores are offering “cash discounts” instead. Yesterday, I accompanied my friend to Megamall to buy a digital camera. We saw a good one from Polaroid that was just slightly over her budget – the price tag was P7,995, and her budget was P7,000. The salesguy then asked that oh so familiar question: “How will you be paying? Cash or card?” When my friend said cash, the guy said, “Then it’s just P7,500.”
• Stores that normally don’t offer credit card purchases – like cellphone stalls in Greenhills – now do, for a 6% additional charge. A clinic in Robinson’s Galleria I once went to has the same policy, as well as camera shops in Quiapo. Their reason: they just need to recover what credit card companies charge them.
• In appliance stores, the ONE price tag rule is blatantly violated. Restaurants also blatantly violate the VAT inclusive rule. I always look for the “Prices are subject to 12% VAT and 10% service charge” fineprint in menus, and it actually is a surprise to not find it there, or to read something that says “Prices are VAT inclusive”.

Does the DTI or the Credit Card Association of the Philippines really have the power and capacity to implement their rules?
But my biggest argument against shopping with a credit card is this: avoiding the temptation to overspend. My friend had a P7,000 cash budget for her camera, and she got one that was just P500 more expensive. When I was shopping for my own digicam two years ago, I had a P12,000 budget, but I ended up buying something worth P20,000 because, well, my credit card limit could afford it. When I was shopping for a laptop last year, I had a P40,000 budget, but I ended up buying something worth P60,000.

It is just soooo friggin’ easy to overspend with credit cards. So, after painfully learning my lessons, my answer to the question “Cash or Card?” is Cash. As much as possible, cash. If you must have a credit card for “emergency” purposes, leave it at home when you don’t plan on using it. If you can’t save money and think a credit card will extend your purchasing power, think again. Credit card debt, and the huge interest expenses that come along with it, is a painful burden.