Tuesday Two: Cash or Credit?

walletphoto credit: mangpages

With the economy in it’s sad shape, I’m definitely watching my money more closely. I love using my credit cards because they’re all tied to some sort of cash back or rewards program. But studies (like this one) show that people spend less when paying cash than using credit.

Maybe I should be more like my dad, who NEVER uses credit cards (unless he’s paying for gas at a gas station). Hmm, would I spend less ‘cuz it’s more painful to watch my money slip right out of my hands. Maybe I should carry $100 bills so I’ll be less likely to spend them due to the denomination effect. Wait a minute, but then once that large bill is broken, I may be more likely to spend on other unrelated purchases similar in spirit to the shopping momentum effect. Oh man, I’m just doomed to spend.

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Kurt May 19, 2009 Reply

while it's true that i can possibly blow a bunch of money on a big purchase, I don't really buy anything I don't need…unless I have cash in my pocket.

When I have cash I go out to eat or buy a shake or whatever. If I have to have cash, i prefer to mix and match — have mostly larger bills but keep a few smaller ones so that I don't break the big ones for that thing that I actually really do have to pay for (toll, for example)

Jen May 20, 2009 Reply

wait, kurt, i didnt get that. do you usually use cash more often then?

I think there are studies out there that show gender differences in using cash and credit. Guys generally use cash more often while girls tend to charge.

nat lowe May 21, 2009 Reply

i charge for sure. i never carry around cash. i don't like dealing with change and stuff.

Talk to me, Goose.

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