As I walked out of a store last week and saw the Salvation Army kettle, I realized that I didn’t have any cash for a donation. I began to think about how our habits have changed when it comes to how we spend.
No doubt, paper money is losing its popularity. Recently, U.S. Bank conducted a survey of people’s spending habits. The survey of 2,000 people found that less than half said that they carry money with them and nearly half of these said they kept less than $20.
So if we don’t carry cash, how do we pay for things? In a 2016 survey, the payment processor TSYS found that 40 percent used credit cards and 35 percent used debit cards. The use of checks came in at 11 percent and cash at 14 percent to round out the top four types of payments. During the past two years, the preference for credit cards has increased and the use of debit cards has decreased. The survey found that people tended to use debit cards for everyday purchases and credit cards for our more expensive purchases.
There is a new method for payment that seems to be gaining some traction. It is the person-to-person payment directly from one person’s account to another account, which is accomplished by using an app. Though this method of payment is still in its infancy, it has been quick to be adopted by our youngest citizens who pay everything by mobile phone.
This points to the general trends in spending money in our society. We go to the store and pay with a card of some type. We order online, we pay with a card. So it makes sense that the use of cards is increasing and cash is decreasing. There is an added security of paying with a credit card or even a debit card that many people enjoy.
The way you choose to pay for items has a great deal to do with how much you spend and how much you value that purchase.
A survey by Dun and Bradstreet showed that people at a fast food restaurant spend 18 percent less when they paid in cash. There is a pain associated with spending cash. You recognize the value of the money and what you are trading it for, the item you are buying. However, when you purchase with a card, it doesn’t have the same effect. So we tend to spend more.
A recent report in the Journal of Consumer Research analyzed how we pay for food in the grocery store and what types of food we bought with it. When people paid with cash, they tended to buy more healthy foods. Those that used a credit card seemed to more often have more unhealthy foods than healthy ones. The researchers felt that paying with cash was painful and that seems to curb impulse spending. With credit cards, that same pain didn’t exist, so those unhealthy impulse items seem to land in our cart.
We seem to be moving toward more convenient methods of payment and away from those that cause us pain. However, we need to be aware. This holiday season as you purchase items, pay attention to what you are spending. Whether the purchase is made in cash, check or by card, think before you spend and you won’t have that January “I spent too much” hangover. And don’t forget to put a few coins in the kettle as you leave the store.
Roxie Rodgers Dinstel is associate director of the Cooperative Extension Service, a part of the University of Alaska Fairbanks, working in cooperation with the U.S. Department of Agriculture. Questions or column requests can be e-mailed to her at email@example.com or by calling (907)474-7201.