Cash vs. Card: How Payment Methods Influence Our Spending Habits

Card payments tend to make us spend more money compared to cash payments, according to a new study. This phenomenon is attributed to the physical representation of money in the form of banknotes, which makes us more mindful of our budget when we pay with cash.

Researchers from the University of Adelaide and the University of Melbourne in Australia analyzed 71 previously published articles on spending habits in 17 different countries, as reported by ScienceAlert. The findings suggest that using non-cash payment methods, such as cards or phones, leads to less strict budgeting, likely due to the absence of a tangible representation of the money being spent.

Lachlan Schomburgk, a marketing researcher at the University of Adelaide, advises consumers to use cash whenever possible to prevent overspending, as the physical handling of money can act as a form of self-control. The study indicates that people are more careful with their finances when paying with cash because the physical transaction makes the expenditure more noticeable.

Interestingly, the researchers discovered that tips or donations were not higher when people paid by card. Schomburgk notes, "Contrary to our expectations, we found that card payments do not necessarily lead to higher tips or donations compared to cash."

The study also found a correlation between more favorable economic conditions and the frequent use of cashless payments, although this effect slightly diminished over time. Additionally, as cashless payment methods become more common, their impact on consumers' spending habits decreases due to habituation.

Schomburgk highlights the importance of this research in understanding the transition to a cashless society. He believes that gaining insights...