A lot of money-saving advice includes ditching plastic EFTPOS or credit/debit cards and using physical cash instead. But does this really work? Many money-savvy individuals suggest using cash in bills and coins instead of cards to cut down on unnecessary spending because making purchases using electronic payment methods may encourage impulsive spending.
Here are some of the biggest reasons why using your EFTPOS card instead of cash allegedly encourages impulsive spending (with our verdict below):
1. “Out of sight, out of mind.”
EFTPOS cards carry digital money, which doesn’t possess a physical form in the real world. For most people it feels like having almost imaginary money that’s just floating in our world’s endless stream of data. Because people can’t really see their money go down in value in real time, it can become easier to spend money on impulsive purchases like excessive drinks at a bar or a new pair of shoes on sale.
Paying electronically also gives the option to delay confrontation with the reality of our bank account statements. We can clearly see our cash dwindling as we spend more, but we don’t have to look at our bank statements unless we really have to.
2. Giving up physical money feels painful.
A study from the University of Toronto revealed that giving up physical money, especially bills, can be a painful experience. Different payment methods trigger different levels of discomfort, and it turns out that “losing” cash triggers more uncomfortable feelings compared to other methods.
We seem to be more attached to physical cash than ambiguous EFTPOS cards because there’s a clear exchange or trade happening, making us value our purchases more.
3. Paying with cash is inconvenient…
And slows the buying process down. In the amount of time it takes for people to reflect on how much physical cash they have left, and then counting the bills and coins they’ll need to fork up for the purchase, people have more time to change their minds and just say, “Actually, you know what? I’m good.”
The Money-Saving Verdict
Although the evidence suggests that people are more reluctant to spend money when using cash, ultimately it all comes down to practicing good spending habits. EFTPOS cards, credit/debit cards and cash are only means to the same ends. And while using cash helps, classic money-saving tips such as budgeting, checking your bank balance regularly and self-restraint are common practices that we can turn into good habits over time.
As long as you are financially responsible and diligent with your budgeting, having an EFTPOS card and saving your money with a bank can reap great benefits over time. An EFTPOS card is easy to store and set-up, and actually losing it doesn’t feel so bad as losing cash because dropping your card doesn’t mean you’ve lost your money – it’s still safe in the bank.
Most Kiwis prefer paying with EFTPOS because their advantages far outweigh their disadvantages, and as a nation we use EFTPOS to make purchases of any kind. And despite being reliant on EFTPOS cards, many Kiwis boast hefty savings accounts.
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