To spend less, pay cash

It turns out that the payment method affects how we spend money. Scientists have found that when using cash, people tend to relate to the cost more reasonable.

A recent study conducted with the support of the Agency for Financial Consumer Protection (Consumer Financial Protection Bureau), has shown that when paying cash, we tend to spend less money.

In a studyBrett Theodos, Christina Plerhoples Stacy, Margaret Simms.An Evaluation of the Impacts of Two "Rules of Thumb" for Credit Card Revolvers. attended by 14,000 credit card users who already have debt. The purpose of the experiment - to check if that helps these people a simple principle of payment of purchases in cash to reduce the debt on the cards. Researchers have established two rules.

The first was that for all purchases that treated participants is less than $ 20, the subjects had to pay in cash only. According to the second rule, study participants were constantly reminded that payment by credit card can add 20% to the value of their purchases. These reminders were sent to the post office and the test demonstrated through banner advertising. Participants were even sent magnets with appropriate tips.

The results showed that all these actions have led to the fact that after half a year in the subjects decreased arrears loan. On average, the difference was $ 104.

It may seem that for six months it is a small amount. But when you regularly pay interest on credit loans, it is quite significant. In addition, according to the carried out in 2012 a study using a credit card, people choose products according to their characteristics, rather than on price, and often overpaid.

Previously, scientists have foundAvni M. Shah, Noah Eisenkraft, James R. Bettman, and Tanya L. Chartrand.Cash vs. Credit: Does the Way You Pay Change How You Value a Purchase?. That those things that we bought with cash, usually to our great value. So we have a better feel the fact of purchase.

In several experiments, the researchers compared the effect of the payment card and cash. During one of these experiments, the subjects acquired mugs for $ 2, paying in different ways. The researchers then asked them to sell these circles and allowed the participants to independently set a price.

As a result, those subjects who used cash in the average asking $ 3 more than those paying by credit card.

In another step, the study participants were asked to donate to charity $ 5. Those who passed the amount of cash feel more satisfaction from this action.

The researchers concluded that even with the same value of purchases acquisition value is far greater when you pay it in cash.

As psychologists say, in this case, people are increasingly suffering from the painful experiences of parting with money, so things are bought for their greater importance.

If you think that You spend too much moneyYou can draw from the above, a useful conclusion. Try less to pay for purchases by credit card. Cash allows you to keep better track of where the money goes, and thus spend it more wisely.