Credit Cards And Gift Certificates Are More Like 'Monopoly Money' Than Real Cash

People are more frugal when paying cash than using credit cards or gift certificates. They also spend less when they have to estimate expenses. The conclusion that cash discourages spending while credit and gift cards encourage it arises from four studies that examined two factors in purchasing behavior: when consumers part with their money (cash versus credit) and the form of payment (cash, cash-like scrip, gift certificate or credit card). The results, wrote the authors: "The more transparent the payment outflow, the greater the aversion to spending, or higher the 'pain of paying.'" Cash is viewed as the most transparent form of payment. Read More...

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