To charge or not to charge?

Arthur Vidro
On Consumerism
To charge or not to charge?

Brought our car in for its annual inspection shortly before Thanksgiving.

It didn’t pass right away. The brake light assembly — not just the bulb but the whole assembly — needed replacement. And that part had to be ordered. It would take a few days to arrive.

Also, the mechanics recommended getting a new front shock absorber and strut (and the wheel alignment that normally accompanies such work). This repair wasn’t needed to pass the inspection, but it would be better for the car and safer for the passengers. Those parts, too, needed to be ordered.

I asked how much all this would cost. They told me.

I gulped and told them to order the parts.

I had gulped because the amount was roughly one thousand dollars.

Over the next few days I pondered what method of payment to use.

First I went to the bank and deposited a couple of checks that had been waiting to be brought in. Now the checking account would have enough to pay for the repair, if I chose to write a check.

On the other hand, I could put it all on my credit card.

Either method has its pros and cons.

Paying by credit card allows you to use the credit issuer’s power to challenge a charge if it turns out to be wrong (such as having one charge ring up twice), or the repair work is shoddy, or if the merchandise somehow is not as advertised. (Note: These protections do not exist when paying with a debit card.)

Charging also gives you time to pay. Instead of paying for a car repair on the day you pick up the car, you get until the due date in your monthly billing cycle. In my case, it would mean delaying the payment by at least a month. If you don’t have the money now, but will have it then, that’s a reason for charging.

Another reason some might charge: many cards have rewards programs, and the more you charge, the more rewards you earn. In my case, a charge of approximately $1,000 would translate into a $10 cash reward. Other cards offer rewards of other sizes or non-cash rewards.

But there are reasons not to charge.

Charging solely to reap rewards often leads to overspending. We delude ourselves into thinking we are saving money, when in reality we are purchasing items we don’t truly need.

Many places nowadays — though not a majority — add a surcharge for accepting any payment made with a credit card. Claremont City Hall, for instance. The purpose is to reimburse the vendor for the fee that gets assessed by the credit card company. A vendor’s surcharge typically runs from 1.5% to 3.5%, but there are no laws regulating this surcharge. So be on the alert for it. In the absence of signage, ask. This surcharge wipes out almost any benefit gained by using a credit card.

If a surcharge is tacked on for paying by credit card, then don’t pay via credit card. (My mechanic’s shop accepts credit cards without imposing a surcharge, so that wasn’t a consideration.)

If you don’t have the money now, and won’t have it a month from now, then you’re merely borrowing from the charge company, and you will end up paying a lot of interest if you can’t pay off the amount in full by the due date.

A lot of people don’t pay enough attention to their bank accounts. Whatever amount a machine tells them they have at a given time, the person assumes that’s how much they can spend.

This method does not take into account payments that have already been made (checks sent out) but not yet processed, or payments that will be made (such as by automatic deduction).

Too many folks ignore these soon-to-happen debits, such as a check written a month earlier getting presented tomorrow for payment. These folks mistakenly deem themselves richer than they are. So they are quicker to spend yet more money on what, in retrospect, are non-essentials.

My checkbook at home always tells me how much is available AFTER all the written checks are processed. It doesn’t matter to me if some get processed right away, two weeks from now, or two months down the road.

Plus, in my case at least, there is a reluctance to go into debt. If a large debt looms overhead, I worry about it until it is dealt with.

A lot can go wrong. There might be a delay in the post office’s delivery of the credit-card statement or of my check.

Money I’m counting on to come in might get delayed.

More likely, other unexpected expenses might arise, also demanding payment, and there wouldn’t be enough funds on hand for all the bills.

There is no right or wrong answer for how to pay a large auto-repair bill. Just be sure to pay it. The method of payment should be an individual choice.

Just be aware of all your options and what your decision means.

In our case, at the start of December the work was performed. And the bill came to just what the estimate had been, down to the penny. I already had the check typed out and ready to hand over.

This experience once again made me glad to be in New Hampshire, for in most states I’d have been faced with sales tax for another $80 or so.