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Credit cards lip-sync a siren song of spending

Credit and DebtBeyonceClint EastwoodThe Detroit NewsManti Te'o

Ours is an age of anxiety. Will global climate change create oceanfront property in Nebraska? Do Subway's "foot-long" sandwiches span a full 12 inches? Did Beyonce fake the national anthem and -- more importantly -- will she lip-sync again at the Super Bowl?

I, for one, believe it is pointless to agonize over trivia, so let's confront the big question here: Beyonce will lip-sync at the Super Bowl to a backing track prerecorded by Manti Te'o's fake dead girlfriend while sitting in the lap of Sasquatch in the chair that Clint Eastwood yelled at during the Republican National Convention.

Also, the ocean won't ever make it farther inland than Arkansas.

This ain't happening

If you really want something you don't have to worry about, try the latest "cause celebre" of the personal financial worry-warts: credit-card checkout charges.

Sunday marked the first day that merchants -- if they are crazy, self-destructive and exceedingly parsimonious -- may charge a processing fee on credit card purchases. This used to be banned, but it's now OK after an anti-trust settlement.

Retailers already can insist on a minimum purchase of up to $10 to use a credit card (but not a debit card). That practice also used to be banned under card network agreements but was legalized in post-recession financial reforms. Both measures aim to help mom-and-pop stores that don't have the clout to negotiate discounts with the big card processing networks, which can be up to 3.5 percent of the purchase, plus a flat fee.

While some personal finance writers are all aflutter about this, I don't see the problem. Consider that the minimum-charge rule went into effect in July 2010, and beyond the occasional small store, I don't see many merchants taking advantage of it.

That's because people spend more when they use plastic. Studies estimate that shoppers spend 12 to 18 percent more when using cards over cash. So don't expect stores to kill that golden goose just to offset a 3.5 percent card-processing fee, unless it's the guy with the only cold beer stand on the beach.

Paper (money) cuts

It's not so much that people spend more when using credit cards, debit cards, gift certificates or even trinkets and beads, but more that they spend less when using cash. The authors of a study published by the Journal of Experimental Psychology: Applied found that "the pain of paying is higher when paying by cash."

So, even if you aren't worried about paying the nonexistent credit-card checkout fee, paying with cash remains the best way to really save when you're shopping. Otherwise, the spending doesn't feel real enough to make you consider the cost of the money you're handing over. Or, as Beyonce might lip-sync, "There ain't nothing like the real thing, baby."

(Brian J. O'Connor is an award-winning columnist for The Detroit News. Contact him at

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