A new study commissioned by PayPal has found that while there are many e-payment options in Singapore, 43% of respondents here said that cash was the payment mode they used most often. Only 3% said they used e- or mobile wallets most often, and an even more dismal 2% said contactless payments via mobiles were their most common payment method.
Using cash is normal. There are still a number of places which do not accept credit cards. So 90% of people using cash is expected.
However, according to this study, 43% of Singaporeans said that cash was the payment mode they used MOST often. Which I take it to mean that they will use cash for transactions which accept cards as well.
I understand when it makes financial sense to use cash or bank transfers.
Like most clinics only accept cash or NETS.
Or when booking budget airlines, the cheapest payment mode is via bank transfers.
Now these are actual valid reasons why not to use any form of credit card.
Cos there is either no choice, or there is a financial benefit from NOT using a credit card.
However, when we look at the variety of credit cards which are available, 61% own a credit card, but only 25% of people use it most often. I'm one of the 25%. Credit cards are the best way to save money... Strange but true. If people take advantage of the rebates, they would be getting a 3-5% return on money SPENT. Which means they get a 3-5% discount on any thing on top of whatever discount they are going to get. I did a post on this previously. These are just stand alone cards which do not need much monitoring. I can somewhat still understand why some people would be turned off if they have to jump through hoops to get bananas (according to Mr15HWW). So let's not talk about combo-ing the cards for bonus interest or any complex spending requirements.
But even if we take a simple credit card.
The Citibank Cash back card, minimum spend of only $888
Or BOC Family card, minimum spend of $500
Or OCBC 365 card, minimum spend of $600
I would not even talk about the DBS Visa Debit card, with 5% rebate for Paywave, cos it may be a bit troublesome to not be able to withdraw $400 of cash from your bank.
I'm sure most people would have a minimum spend of $500 on their total expense for the month. Any average person should be able to hit a $500 spend. We're talking about averages here, not the frugal community. Cos the study above is saying most people use cash. So my point is that any normal person should just switch to the BOC Family card at the minimum. Cos it's easy to spend $500 in a month and you can get a rebate straight off it.
So I don't understand why people just don't get used to swiping their cards.
It's like throwing away free money. A simple estimation is that most people are throwing away at least $15 per month. $500 x 3% = $15.
It's interesting, cos free money not taken is the same as money thrown away. Yet somehow the mind doesn't see it as such.
Let's say you didn't use your credit card, so you don't get the $15 rebate. So you have $0.
Next, I give you $15, and ask you to throw it into the dustbin, you still have $0. But you would think I'm mad for asking you to throw away that good cash.
So going by that thinking, if someone thinks I'm mad for asking them to throw away the $15, then it would be fair to say that they think that they are also mad for not earning the free $15 of rebates offered by credit card companies. Of which it takes no real additional effort, cos paying for something in cash requires opening the wallet and taking out the cash, same as opening the wallet and taking out a card.
There's even a convenience, cos you don't need to count change, make mistakes in payment, wait for the cashier to count, etc.
So why do people still NOT choose to use cards and continue to use cash...
Some reasons I thought about...
1) They lack financial discipline
Ok fair enough, they may end up overspending on their credit cards and end up in debt. Not a good reason. But ok, I think I would prefer people to not have financial troubles, than to try to learn discipline and end up in a mess.
2) It's just a habit since young
Since we were in school, we always used cash. So it's natural to think that people would continue to just use cash. I switched to cards cos I had an unfortunate incident where I went on a date and had insufficient cash to pay for the meal... OH MY GOD, the embarrassment of that incident... hmm, maybe that's why people still hold large amounts of cash.
3) They may be trying to wash some cash
I mean some form of money laundering. They may have some undeclared income which they just want to slowly spend and avoid any financial system.
4) Lack of knowledge
Some people don't know about these promotions or rebates. They just aren't getting the info. It's like I'm not interested in Jay Chou, so I don't know when his concerts are or how much they cost. I just don't notice the info even if I see the adverts.
Anyway, I find it somewhat strange and yet, I've seen it happen before my eyes. My wife used to just use cash. When we were younger and when I started managing the cashflow, I noticed that she used cash very often, so I asked her why. Her response was, "It's just a couple of bucks, it doesn't make a difference and it's a habit." Well, I told her to change that habit, cos the "couple of bucks" all add up and we can get some free money out of it so it needs to change. Now, she just asks me which card to use and I update her when the limits are hit.
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