It takes a banker to praise the cash economy

Mr Barett of Barclays is paid £1.7m, which may explain why he can afford to pay cash for everything

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In a perfect world Matthew Barrett's pious assertion that he never uses credit cards to borrow money and gives his four children the same sound financial advice, would be writ large on hoardings beside motorways for the benefit for everyone setting out on The Great Journey of Life. Mr Barrett is the boss of Barclays, which made £450m profit last year on credit card charges alone. His annual salary is £1.7m, which might explain why he can afford to pay cash for everything and pass any discount for doing so on to his children.

I know a woman who has honed the practice of paying in cash to a fine art. When her son left his London day school to complete his sixth form education at one of those rarefied boarding schools where the pupils wear tailcoats for dinner, and are flogged for saying dreadful words like "toilet" and "serviette", she made an appointment to see the headmaster. She came straight to the point. What discount would he give her, if instead of playing six lots of school fees by cheque at £7,000 a term totalling £42,000, she were to give him a lump sum in cash right away?

The headmaster, who had been pouring dry sherry into two small glasses, was so astonished, he spilled Tio Pepe over the cheese puffs. It was not a subject that many new parents raised, he confessed. Indeed, he didn't think he'd ever come across it before, but he was sure that the bursar ... "how about 15 per cent?" interrupted my friend. For, gentle reader, as I'm sure you've guessed, the woman in question happens to be a friend of mine, which is why I am privy to the intimate details of the transaction. Most retailers, continued my friend, wiping sherry off the headmaster's desk with her glove, offered a 10 per cent discount for cash, sometimes 15 per cent. She had recently got 20 per cent off the advertised price of a fitted kitchen. "What about £35,000 excluding extras?" she suggested, snapping open a briefcase like Alec Guinness in The Lavender Hill Mob to reveal neatly stacked bundles of £50 notes.

Now you may be wondering where my friend comes by such large amounts of cash. It's a question I have often asked myself, but delicacy prohibits me from putting it to her. She has a lot of flats in London, whose tenants, like Matthew Barrett, eschewed plastic and paid their rent only in cash. This seems to be a mutually beneficial arrangement, provided she keeps them supplied with black ash coffee tables and microwave ovens, though she had a nasty scare the other day. A South African dentist renting one of her Clapham flats threatened to shop her to the Inland Revenue if she didn't agree to strip and sand his floors throughout. I'd better rephrase that. If she didn't agree to have his floors stripped, sanded and waxed, immediately.

But I digress. I was telling you about the great school fees heist. Did it work? Of course it did. Having ready cash is one thing. Having the chutzpah to nail down a really good deal is something else entirely. Personally, I'd rather pay the full whack and avoid the toe-wriggling morale-crushing embarrassment of haggling with some supercilious assistant manager (sales) about the possibility of getting £3.75 off a pressure cooker. But each to his own.

All this, I appreciate, had little to do with the frightening ease, thanks to credit cards, with which people, especially students, slide into debt these days. I heard a radio programme recently about debt and, more importantly, the easiest way to get out of it. The answer, advised the presenter, had nothing to do with budgeting or working harder, or getting a second job. It was to declare yourself bankrupt, wipe the slate clean, and start again, with a whole new batch of credit cards.

One young man called Jason or Jake or Josh, something snappy and modern, gave a brief run-down of his expenses as a twentysomething city slicker. They included eating out five nights a week, bottles of champagne at lunchtime, £100 tickets for pop concerts, monthly standing orders for membership of various fashionable clubs and gyms. He had reached his maximum overdraft level on all his six credit cards, and was seriously considering doing something really drastic like selling his Porsche, when he ran into an old college friend, who took him off for a bottle of bubbly, and told him about the bankruptcy wheeze. "It worked like a dream," said Jason.

I'm sure Mr Barrett would agree.

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