Suze Orman says we should all pay cash

Suze Orman has a message for credit card companies that are jacking up interest rates, raising fees and otherwise treating their customers badly: Bye-bye.

We don’t need you. We’re going to pay cash.

On her Saturday night show on CNBC, she asked viewers to join her in a Back to Cash movement. “Let’s go back to the good old days,’’ she said. “Let’s go back to the times when you literally paid cash for everything. That’s right. Cash. Stop using your credit cards altogether.”

Like most personal finance writers, Orman in the past has advocated the responsible use of credit cards: choosing the best deals, paying off your balance every month and building a strong credit history in order to boost your FICO score.

Well, forget that, girlfriend, she says. Now it’s time to just say no to banks that are trying to squeeze every penny they can out of us.

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On her show, Orman read a letter from Citibank to her director’s wife, raising the interest rate on her card to 29.9 percent, though she had never missed a payment. We’re all getting those letters, and some customers already have voted with their feet, figuratively speaking, canceling their cards rather than pay higher fees and interest rates.

Ann Minch of California went on YouTube to complain about Bank of America raising her interest rate, hoping to spur a debtors’ revolt. Unlike many customers, she also got her interest rate reduced to its previous level and was featured on Orman’s show.

But it’s unlikely we can all go on YouTube and win better credit card terms.

So should we turn to cash?

It’s an intriguing idea. Why do business with companies that treat you badly?

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Some businesses give you a discount when you pay cash, because the business doesn’t have to pay interchange fees, amounting to 2% to 3% of the transaction amount, to Visa, MasterCard or Amex.

And, for many people, paying cash means spending less, which is always a good thing.

Financial broadcaster Dave Ramsey has always advocated shunning credit cards and paying cash. “You do not build wealth with credit cards,” he wrote in an article entitled The Truth About Credit Card Debt. “Use common sense. When you play with a multi-billion dollar industry and you think you're going to win at their game, you are naive. You cannot beat the credit card companies.”

But the convenience of credit cards is hard to give up, plus you get extra warranty protection and often rewards such as cash back or airline miles. For those reasons, some people pay for everything with credit cards.

While it’s possible to live without a credit card, it can be difficult, especially if you travel. Debit cards have their own set of problems. Not using any credit at all can make it difficult to get the best interest rates on a mortgage or a car loan.

What would it take for you to give up using credit cards and go back to cash only, or at least cash, checks and debit cards?

These days, credit card companies are acting as if they don't really want our business, especially if we don't carry balances and pay our bills on time, avoiding some of the most punitive fees. Do you suppose they'd change their tune if we all turned to cash?

Related reading:

• Are credit cards evil or just dangerous?
• Credit card lenders go on a rampage
• Angry customers cancel credit cards
• I don’t hate Suze; I just disagree