In the battle between paper and plastic, paper is the undisputed winner.
Consumer psychologists have found that people are less likely to splurge when they only use cash. And this makes perfect sense.
It's always easier to limit yourself to a predetermined amount when using dollar bills. Once you run out of them, you have no choice but to run to the ATM for more.
In the case of credit cards, we can have a credit limit of, say, $8,000, a fact not lost on us when we're at the mall. Thus, we feel less predisposed to put the brakes on our purchases when we know we can just swipe the card countless times.
Using cash also "stings" more because you actually feel like you're losing something. You can open your wallet or purse and see that your hard-earned cash is no longer there. With credit cards, you can postpone feeling the sting until you receive your bill in the mail, which is what the vast majority of consumers would rather do.
Let's not forget that cash is also a safer option. It's easier to swallow losing $100 than it is misplacing a credit card that a thief can use to buy a car. Indeed, using cash protects you against identity theft.
Let's face it: We all need the convenience that credit cards give us. Sometimes we don't have time to visit the ATM, or we may be strapped for cash and have no other choice. We can also rack up handsome rewards (points, cash-back, etc.) when we use them.
However, if we do have cash readily available, we should make the effort to visit the bank at least once a month and get enough money to allow us to alternate between both payment methods, at least occassionally.
Credit cards make it all too tempting for some people to spend frivolously. Don't be one of them. It pays to be a responsible consumer.
To read earlier entries, click here: How to Understand People
Consumer psychologists have found that people are less likely to splurge when they only use cash. And this makes perfect sense.
It's always easier to limit yourself to a predetermined amount when using dollar bills. Once you run out of them, you have no choice but to run to the ATM for more.
In the case of credit cards, we can have a credit limit of, say, $8,000, a fact not lost on us when we're at the mall. Thus, we feel less predisposed to put the brakes on our purchases when we know we can just swipe the card countless times.
Using cash also "stings" more because you actually feel like you're losing something. You can open your wallet or purse and see that your hard-earned cash is no longer there. With credit cards, you can postpone feeling the sting until you receive your bill in the mail, which is what the vast majority of consumers would rather do.
Let's not forget that cash is also a safer option. It's easier to swallow losing $100 than it is misplacing a credit card that a thief can use to buy a car. Indeed, using cash protects you against identity theft.
Let's face it: We all need the convenience that credit cards give us. Sometimes we don't have time to visit the ATM, or we may be strapped for cash and have no other choice. We can also rack up handsome rewards (points, cash-back, etc.) when we use them.
However, if we do have cash readily available, we should make the effort to visit the bank at least once a month and get enough money to allow us to alternate between both payment methods, at least occassionally.
Credit cards make it all too tempting for some people to spend frivolously. Don't be one of them. It pays to be a responsible consumer.
To read earlier entries, click here: How to Understand People
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