Paying Cash: Still Getting the Best Deal?

May 2, 2008
In the Bedroom

Here’s a question that was submitted to us last week: Do I get a better deal on a mattress and furniture by paying for it with Cash?

Over 20 years ago 75 percent of all bedroom furniture, waterbeds and mattresses and boxspring purchased were paid for with cold hard cash. At that time it seemed cash was hard to earn. When you bought something like furniture, you could really see the green stuff leave your hands, which made spending it on a bed just a little bit harder.

People knew paying cash money for items such as mattresses held more clout than a plastic credit card. In days past customers appeared to recognize that buying furniture with their plastic money created additional overhead for a retailer. Not only that but they seemed to really understand the trickle down affect, and the cost of processing a credit card and what it translated into when buying something like a new bedroom. Customers seemed comprehend that the cost incurred by the retailer would be passed on to them, which in turn did not save them money on their purchase. So as a retailer it was no surprise to hear the famous question “how much can I save if I pay you with cash”?

The big difference between 22 years ago and today is that nearly 80 percent of all our purchases for mattresses and bedroom sets and everything else America buys is paid for with plastic charge cards or debit cards. The names of these credit cards are as familiar as Elmo and Barney. I’m sure you’ve heard the slogans, “For everything else there’s Master Card”. “Visa don’t leave home with out it”. “Discover the difference”. Lastly from American Express “My Life My Card.” These powerful advertising campaigns and others have won us over. They have persuaded most us from using cold hard cash, and have brain washed us into thinking that credit is the new king.

When you visit retail stores as a consumer what does all that cost you? More than you might think. Businesses like mattress and furniture stores and other types of retailers pay a percentage of each and every credit transaction directly to the credit card company. Those percentages seem to average around 2 – 3 percent. Phone transactions can cost even more because of higher security risk. On top of that, credit card processing machines have to be either rented or purchased. This cost varies based on the type of machine a company uses. There are at least a half dozen fees and other charges that end up on a monthly bank statement each and every month that get passed along to the consumer in the price tag of their purchase.

We’ve all heard the saying “we cut out the middleman and it saves you money”. Well not when it comes to the credit card companies. As a customer when you purchase anything with a credit card there is a whole host of men and women involved in your credit purchase. Simply consider the payroll it takes to cover that purchase. It is pretty mind boggling just how many people are involved from the time of the credit card swipe till the day the bank statement is received by a business like my bedroom furniture store. Once a person really begins to fathom the small things like this the picture becomes a bit clearer.

If everyone paid cash for purchase like mattresses or new bedroom sets, I really do believe we would see retailers start lowering their price tags a bit. Did our mothers and fathers know something we didn’t? Did paying cash really mean you got the better deal? Is the day of horse-trader long gone? Whether it’s a mattress, a TV, or a new car, if more of us paid with cash it would help lower retail costs.

We only need to open our eyes to see the truth that cash is still the real king.

How do you make the majority of your purchases?

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