Invisible Costs

A few weeks ago there was a meme floating around about if you spend using a physical $50 bill, it will remain a fifty dollar bill. But if you spend that same fifty bucks with a credit card - that fifty bucks gets whittled away by credit card processing fees and bank fees and just because fees.

I guess that’s true in the sense that the costs for the physical cash can’t come from the cash. You can’t cut off part of that fifty dollar bill to pay for, say, the gas to get to the bank, and then put the rest in the bank.

TINSTAAFL. Cash ain’t free.

You have to pay people to handle it. If you handle it yourself, you still got to pay for the gas to get to the bank. Or if you walk to the bank, you’ll have the wear-and-tear on your shoes.

And then there’s the risk of counterfeits, robbery, and so on.

But since people can’t see the cost directly - it’s invisible - they assume it’s free.

Tangentially related, last week I was listening to the Clark Howard podcast. Someone was complaining that, when they were making a payment, the automated system tacked on a fee. However, it was free to connect to a human and pay that way.

This was probably because the automated system cost, say, $5 or 5% per transaction. But the human? That cost was hidden since it’s baked in their paycheck already.

Another invisible cost.

Another invisible cost that isn’t free.

I get it, though. It’s hard to know if the invisible cost is more than the visible one. Maybe dealing with counterfeit money and going to the bank is less than 3% of your transactions.

But then again, maybe it’s not.