No. of Recommendations: 4
I for example always use my credit card, gas, groceries, lunches, dinners out, afternoon diet coke for MD, utility payments, etc. But I fail to see how I am spending more as everything I buy is according to a budget, groceries, utility payments, gas, etc. I would have spent the same amount had I used cash or a debit card. BUT AGAIN I WONDER WOULD I (OR OTHERS YOU DO AS I DO) HAVE BUDGETED THE SAME HAD I KNOWN THAT I WOULD BE USING CASH. I think so but I really would like to see what, if anything, the scientific literature says. Unfortunately, I have seen very very few studies of behavior regarding spending habits with a credit card, and as far as I can tell none of these looked at any other factors that might explain the behavior.


I'd be willing to bet that this has a lot to do with other factors that might explain the behavior.

For instance, I can guarantee you that I spend more money when I use a credit card than when I use cash. Why? Because I only use cash for expenses that are less than about $10, so if I spend $15 on something, I will use a credit card. If you watched my behavior, you would see that 100% of the time that I use a credit card, I spend more than if I use cash. But the behavior change isn't that I'm spending more because I am using a credit card. The behavior change is that I use a credit card because I have spent more.

I am still making planned, budgeted purchases, but my method of payment is determined by how much I have spent because it is more convenient.

So I'm not going over the budget or making unplanned purchases because I have more purchasing power with the credit card. I simply choose not to carry very much cash, and will conserve it at every opportunity.

I suspect that I am not alone in this behavior, so I tend to be real cynical when I look at those studies. All they really tell me is someone's preferred method of payment, but that has nothing to do with if that method of payment actually influenced how much was spent. In my case, the answer would be not at all.
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