Research Suggests Why We Spend More Using Credit Than Cash


Not only do we spend more money when we use a credit card, but we also may not make the wisest decisions.

Bill Hardekopf is CEO of  He has some great insight for how to avoid overspending! 

“A study from the Journal of Consumer Research sheds further light on why we overspend with credit card payments. It may even help shoppers stay on their Christmas budgets.

The study ‘Do Payment Mechanisms Change the Way Consumers View Products?’ shows that paying with a credit card increases the natural desire to spend as opposed to cash in identical purchase situations. It describes how perception and evaluation of products differ with cash compared to a credit card payment.

Consumers paying with a credit card are much more focused on the product benefits, and make a purchase based on superior benefits instead of the cost. They identify more with words that describe the benefits.

Consumers that pay with cash are more likely to choose an option based on cost, even if that option offers inferior benefits.

Not only do we spend more with a credit card, but we may not make the best purchase decisions when we pay with plastic.  The study says it is harder to accurately remember the price if you pay with a credit card.”

Hardekopf’s tip: “Consumers must remember that when we use a credit card for a purchase, this is real money coming out of our bank account for payment. The forms of payment may change, but the rules of budgeting and spending what you can afford will always stay the same.”

Here is my tip:  Put the credit card away, and use the cash envelope system until you develop more self-control.  Save yourself money and grief down the road.


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