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9009 West Loop South, Seventh Floor, Houston Texas
1-866-889-9347 |
CCCS of Greater Denver
A Division of Money Management International |
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Regional Headquarters - 10065 E. Harvard Ave., Suite 210, Denver, Colorado 80231 |
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Paper or Plastic? |
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 There’s a new trend emerging in the grocery store business, and it gives an entirely new meaning to the question, “Paper or plastic?” If it hasn’t happened at your local supermarket yet, before too long you should see those familiar MasterCard, Visa and Discover stickers at the front door, indicating that you can buy your groceries with a credit card.
Statistics released recently by the Food Marketing Institute show that the percentage of grocery stores accepting credit cards has risen from 17 percent in 1989, to its current 60 percent, although the number of people who actually purchase groceries on credit is still very low.
Why the change? For starters, it’s a sound business move for the stores, who are simply taking advantage of the fact that credit cards have become so prevalent in our culture. The easier it is for consumers to spend money at their store, the more likely they are to become customers. Also, the technology has advanced to the point where credit approvals only take a few seconds, as opposed to a minute or more.
So it’s a good idea for the grocery stores. But is it a good idea for you, the customer?
The companies marketing this new development will tell you that it’s a good idea for several reasons. First, they say it’s more convenient for you. In other words, if you don’t have enough cash on hand, but you still need groceries, your credit card is the way to go. They will also tell you that it allows you to take advantage of the premiums and bonuses some cards offer for every dollar you charge.
Still, I have to say that anything you do to increase your high-interest debt is ultimately not in your best interest. At Consumer Credit Counseling Service, our educational and counseling programs advise our clients to pay cash as much as possible, and if you have credit cards, to use them only as a last resort.
One of the principals we most strongly believe in is to rarely, if ever, use credit cards to purchase consumables – or products that are gone after you use them. Groceries, restaurant meals, gasoline, tickets, auto repairs, and dry cleaning are examples of this type of product because, after they are paid for, the only thing you have to show for them if you use a credit card is debt. And it’s a high-interest debt that will likely grow a lot higher than the price of the original purchase before you pay it off.
At least, if you purchase an appliance, furniture, or television, you get to continue enjoying the product while you make the credit card payments. In a way, it’s a mental game you play to make sure you are committed to paying off the debt. My experience has shown me that, when people feel they have nothing to show for their debts, they are a lot more likely to feel bitter about repaying them. In the long run, payments become smaller and less frequent, and it takes forever to get the balance down.
Again, paying cash is always a better option than taking on new debt for making purchases, whether it’s a permanent item, like a new sofa, or a consumable, like a night out for dinner. But if you have to make a choice, only charge consumables in an emergency.
In other words, if they ask “Paper or plastic?” and they aren’t talking about the bag, leave the plastic in your wallet.
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CCCS, A Division of Money Management International
Regional Headquarters - 10065 E. Harvard Ave., Suite 210, Denver, Colorado 80231
Corporate Address - 9009 West Loop South, Seventh Floor, Houston, TX 77096
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