The economy is slow, inflation is rising, and the price of everything seems to be higher. What will you do about it? Use your credit card to supplement the difference? I don’t think that’s the answer. The opposite is the answer. Trash your credit cards today, and you will be free from their bondage.
I’ve written about the advantages of using cash over credit cards, even when you never carry a balance on your credit cards. Here are a few more reasons that support my stance on using cash over credit. Donna Rosato from Money Magazine wrote an article in this month’s issue titled, “Life Without Plastic”. Here are some studies she refers to that support the notion that we spend more when we use plastic.
- Researchers performing a study of supermarket shoppers found that people who use credit cards spent more than those who stuck with cash, checks, or debit cards. The average total spent on groceries with cash was $32.96 compared to $43.49 using a credit card. The average total spent on non-essential items using cash was $9.08 compared to $18.72 using a credit card.
- Researchers held an auction for tickets to a sold-out Boston Celtics vs. Miami Heat pro basketball game. They found that people using a credit card were willing to bid up to $60.00 compared to those bidding with cash in their pockets who bid up to $28.50.
- A survey was performed on college students existing a campus bookstore. The survey’s data found that paying cash helps you remember how much you spent. Those that paid with cash remembered how much they spent 68% of the time. Those that paid with a credit card remembered how much they spent only 35% of the time.
There is so much psychology that goes into using a credit card. Credit card companies have mastered the art of making you feel powerful when using a credit card. They name them “platinum”, “gold”, and “preferred member” cards because they want you to feel a false sense of cultural status. The evidence is there. Credit cards help you spend more money, even if you never pay interest on a card. If you want to save more money this summer, cut up your credit cards.