capitalism *is* fun :-)

I was reading some articles in the latest issues of NewsWeek when I stumbled across another great one. Again, the theory that when people are confronted with a serious issue, it’s easy to find some to blame it on, enact some penalty against the respective entity, feel happy at the end of the day that the one to blame has been punished, just to wake up the next day and find the problem is still there. No big deal! We will find someone else to blame and punish by the end of the day … and perhaps after a long period of overlooking the actual problem, and trying to use some creative thinking to solve it … we will start doing something. Here is the story:

Gas-stations are starting to ban the use of credit cards, to avoid paying a 10 cents fee for each gallon of gas paid with a credit-card (at $4 a gallon of gas). Credit card fees are up to 2% of the transaction amount. 2% out of $4 is 8 cents, but let’s bump it to 10 cents (price gouging?) to make MasterCard, Visa, American Express and others, look more guilty … shall we?

Let’s see all the "benefits" of banning credit cards:
- we save 8 cents on each gallon of gas we pay
- we start carrying around large amounts of cash with us. Very good thing. It will definitely help drive small crimes up, and justify some extra government spending on law enforcement.
- we will still pay cash advance fees at the ATM we use, and also, cash advances will carry an interest payment on your credit card, as opposed to POS payments, which carry to interest and offer a free credit for those that pay their credit card bill on time. You get to lose around 1% here.
- Factor in the extra hassle of finding and driving to (using expensive gas) an ATM machine or bank branch, to obtain cash.
- There are still a lot of scenarios that can happen, will happen and erode that great saving by a lot. You don’t have enough cash with you to fill up (since you are used to pay with your credit card for everything), and you will have to drive back again, to fill up your tank.
And many more.
Let’s do some math. I will take the best case scenario for you, the consumer.
Let’s assume you use 200 gallons of gas each month. You will save 2% from credit card fees which means $16.
You lose 1% at the very least, which drags down the total saving for you to $8.
Is it all worth it for a maximum of $8 you can save every month?

Think about for a second. Credit cards are product of free markets and capitalism. If there wouldn’t have been any benefits of using them, would have they become so widespread and accepted by everyone? I really don’t think so.

This reminds me of a story from my past. I was once discussing with a friend, about paying my bills. Instead of going to 5 different places to pay them, I use my internet banking service, pay a maximum of $5 in fees, and pay them all in 10 minutes. He argued with me that it was expensive, since I could just go and pay them with cash for free. No matter how hard I tried explaining him that at least $2 would have been the fee to withdraw that money from my bank account, plus factor in the cost of 5 trips to 5 places (I even considered 3 places to be within walking range, and only pay $2 for cheap public transportation to get to the other 2) … I am still only saving a maximum of $1, while wasting a lot of my time. I told him that the very best case scenario was saving half a dollar at expense of wasting a good portion of the day to walk around paying those bills. Still … he insisted that he was better of then me … with half a dollar

This is the kind of thinking we have to stop using. Overlooking good solutions for an issue we are facing, just because we are looking at an easy to apply and shortsighted solution right at hand … won’t get as anywhere.