Money: Paper Vs. Plastic?


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When was the last time you went shopping and you thought to yourself after seeing an item that has caught your eye "I just GOT to have this!"? This happens a lot in our society with most of the times the item that is being bought is not a need, it is a want. Impulsing buying can be a dangerous thing as it sometimes leads to people buying things that they really didn't need in the first place. A lot of these impulse buys are done by credit cards, so is it easier for people to spend money on things via a credit card then it is to spend using cash?

creditcards.jpg

The answer to that question is yes, we find it easier to spend money on things when we pay for it via credit/credit cards. Don't just take my word for it, this guide also says that spending with credit helps people splurge on luxury/need items. They say that "A Dunn & Bradstreet study found that people spend 12-18% more when using credit cards than when using cash." (Sound Money Tips). Clearly the one(s) who gain the most from this spending are the credit card company's such as Visa or MasterCard, while the credit card holder is sometimes left with thousands and thousands of dollars in debt. But why do we find it easier to hand over our money so easily when using a credit card? It is easy because of a physiological feeling we get when we either use a card or cash. With cash, you have to physically have the currency on you and you take it out of your wallet or purse to give it away to a seller to acquire the item one desires  With credit cards you hand them your card, they swipe, then it comes right back and you get the item. This gives us the illusion that we didn't need to spend money at all, plus the difference between cash and credit is that cash is gone at the point of sale, while credit basically no cash is deducted at the sale. Although that money that we "did not" have to pay WILL need to be paid later on via a bill. With credit cards we tend to create the illusion that the money was never withdrawn and that the user still has it.

That is where the problem lies sometimes with credit cards. Sure, you may have not had to spend the money right when you got it, but that money STILL has to be paid to someone, and that is the credit card company's. This is where a lot of people struggle with being in debt, they spend a large amount of money on their card and soon run out then keep on spending with money that isn't their's/ they can't pay back and then when the bill is due they can not pay it back and then they are in a large amount of trouble. It is ok to have a credit card and is the only way to build up (or in negative cases destroy) your credit score which allows you to get certain things like cars and houses. But using a credit card comes with a responsibility to pay your dues back, it is not a card that allows you to get free stuff. So the basic rules of the credit card is to spend wisely, shop smart, and pay your bills on time and then you have nothing to worry about when it comes to credit cards. 

Now if you will excuse me, I think I saw a sale over at Amazon for Buy one, Get one free Blu rays.

5 Comments

This is an interesting topic you brought up. I have often wondered how so many Americans have gone into debt and credit cards are definitely one of the main reasons. Here is a site with other examples of why people are in debt using Ivy league schools as examples https://retirementplans.vanguard.com/VGApp/pe/pubnews/AmericansBroke.jsf?SelectedSegment=ThinkingaboutRetirement

I can definitely agree with this article. Personally, I have noticed I buy more if I am using my debit card. When I have paper money, I find it more painful to spend the money. It is so easy to just swipe a debit card and not even think about how much money was just spend. Here is an article about how people use and behave with their debit cards
http://topics.nytimes.com/your-money/credit/credit-and-debit-cards/index.html


I am always finding it very difficult to say no to things. One way that I keep track of my money is using my virtual wallet. I literally never have cash on me because when I do have cash, I'm way more likely to spend it freely. I find myself checking my virtual wallet weekly just to make sure that my balance isnt falling too low. If you think that youre spending too much money, look into using PNC Bank and then you can watch your spendings way more easily. The link below has more information on PNC Bank's virtual wallet and how you can watch your spending using a debit card. https://www.pncvirtualwallet.com/features/#vwstudent

I think part of this problem is technology today. Banks make it so easy to simply transfer money directly on a smart phone. I honestly rarely ever have cash at all. It's definitely so much simpler to just swipe a card, especially in a long line full of people. I think this problem also has to do a lot with self control in general. I think I've come to a lot of realizations about money in the past few years because frankly....I'm broke haha. I honestly do believe there will be a time where we no longer use paper money, and I'm actually fine with that. This is an interesting article regarding avoiding credit card debt that you may find interesting as well.
http://money.usnews.com/money/personal-finance/articles/2013/09/25/how-to-avoid-credit-card-debt

I agree 100% with Kaitlin. Also, I find myself to be one of those shopaholics who tends to buy things I want, even when i don't need them. It is a lot easier these days to use the phones/ technology to somehow retrieve funds. Luckily, my bank has limits. I am allotted only 3 online transfers a month, without being charger. Also, I personally do not have credit cards at any of my favorite stores because I don't want to start bad/stupid habits. I'm assuming alot of banks and companies have certain rules such as this so that the big spenders don't go top hard. For example, lots of ATMS have a maximum you can take out that day and credit card companies decline you after you spend a certain amount in certain time periods. With this being said, I don't think using credit cards is the worst thing in the world, but it is definitely something that should be monitored. If it becomes an addictions, there are many ways to stop an addicting activity, check out this site for more info! http://www.indiana.edu/~engs/hints/shop.html One suggestion says yse a debit card...if you still need the swiping thrill..maybe set up a debit card linked to your bank account, then you can avoid tons of debt!

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