Polls / April 5, 2011

Do you spend less when using cash rather than a credit or debit card?

Respondents to the latest eZonomics online poll are almost evenly split on whether they spend less when using cash rather than using a credit card. In total, 47% of more than 1,400 respondents say they do, while 53% say they don’t.

Don’t part me from my cash
We’ve enjoyed a meal out – and then the bill arrives. Do we pay with cash, or pay with a credit card? Behavioural economist Dan Ariely blogs that paying with a credit card might “hurt” less than paying with cash, as using a credit card puts a larger gap between the time of consuming the meal and the time of paying for it. It suggests that diners – and shoppers – might be inclined to spend less when using cash because handing over hard currency “hurts” more than swiping plastic.

Can paying with cash help me budget?
When it comes to sticking to a budget, cash and credit cards have different benefits. Debit or credit cards record each transaction and can make it simpler to electronically monitor spending and keep a budget on track. However, some suggest using cash to help shoppers stop and think about what they are buying. On the Bundle blog, writer Presh Talwalkar says the technique of withdrawing a set amount of cash and committing to not spend any extra helped him stick to his New Year goal of not going over budget on nights out. Likewise, Art Markman writes in his Ulterior Motives blog at Psychology Today that it is easier for shoppers to keep track of how much they spend if they physically carry cash.

Are mobile phone payments different?
Wired outlines experiments on the differences between cash and credit card payments and says cards tend to “hurt” less than paying with cash. It goes on to ask if the pain payment effects will be even greater with payments via mobile phone and other emerging technologies.

Goal settingDan arielyCards

eZonomics team
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