Polls / September 9, 2011

Have you ever tried to cut spending by going on a "cash only diet" and not using money cards?

Respondents to the latest eZonomics online poll are split over whether they have tried to cut spending by going on a “cash only diet”. More than a third – or 35% – say the have gone on a cash only diet, 39% have not and 26% don’t need to cut their spending.

I'm slimming down (my credit card bill)
There are plenty of tactics people use when trying to cut spending. Some freeze their credit card in ice, meaning they must think twice (as the ice melts) before using it. An alternative is to go on a cash only diet, on which a money card is used to withdraw cash once a week then the card is kept locked away for the next seven days. Personal finance website Savvy Sugar suggests the method as a way to curb the urge to overspend. 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.

Paying with cash "hurts" more
Behavioural economics theories lend weight to the cash only diet. It suggests paying with cash "hurts" more than paying with credit card because the transaction involves physically handing over money – rather than swiping the plastic and being charged at a later date. Behavioural economist Dan Ariely blogs on the topic. Likewise, the Psychology Today Ulterior Motives blog details research that suggests a cash only diet might help with food diets as well. It says the "pain" associated with paying for an item with cash rather than a credit card might also help shoppers keep their weight down as a study found supermarket shoppers bought more unhealthy, impulse buys (such as candy and cookies) when paying with a credit card.

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