Ever since the introduction of the first charge card in 1946, companies have been making it easier and easier for consumers to spend their money. Solutions like Apple Pay, Google Pay, and contactless cards allow you to spend your money without interacting with a machine. Banks also offer credit card rewards to try to entice you to ‘spend more to earn more'. These psychological tricks help banks rake in billions of dollars per year in interest revenue, which is what funds reward programs year after year. In the end, it has led some to wonder, should we go back to cash?
A study by the company Dun and Bradstreet found that those who use a credit card tend to spend 12%-18% more, while a study from the Federal Reserve Bank of Boston found that the average credit card transaction price was about 5.1x higher than the average cash transaction price. Some theorize that credit card spending levels are higher because your brain does not experience the pain of actually seeing cash leave your hand. When you swipe your card, it's as easy as tapping and forgetting the transaction for the rest of the month until your statement comes.
But credit cards (or debit cards) are a necessary part of today’s digital world. Next time you choose to use a credit card, remind yourself of the price you are paying, whether you need what you are buying, and how many hours of your life it took you to earn those dollars.
Author: Jacob Patterson October 9, 2022
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