Connacht Tribune - Opinion Piece
Credit cards take the pain – and reality – out of spendingJune 27, 2012 - 9:58am
One of the most soulless exercises you can perform in life is to purchase a present for someone off their wedding list – using a credit card. Because it’s the closest thing you’ll get to a virtual reality.
You go into your luxury goods shop and ask to see someone at a computer screen where you choose the price range for the present you have in mind; you select, pay with a credit card and the goods are delivered to the happy couple at some stage after they return from honeymoon.
Practical? Yes. Efficient? Absolutely. And it saves you the stress of the old system whereby you had to spend half of the wedding day, carrying a toaster in a box under your oxter.
But because you’ve never seen the goods you’ve purchased – or paid for them with real money – how do you know your present ever even existed, let alone arrived at its intended destination?
Unless you go and visit your newly married friends and discover that, yes indeed, they have the Lladro boy and girl on the mantelpiece, you’ll never know that they didn’t use the price of your present as part of the cost of a new plasma TV.
The point of all this is not be seem like Victor Meldrew at the wedding – although it’s a role I’m not entirely uncomfortable in – but it’s how using credit cards instead of cash can leave you with a false sense of reality.
If you’re out for dinner and pay with Laser or Visa, it somehow doesn’t seem to hurt as much as getting out the wallet and counting out the cash.
You can now read a book review on the net and go straight to Amazon to order an ebook version of the new publication, which you pay for with a credit card – and again you wonder if all of this actually happened in real life.
But if you read this in a newspaper on a Sunday, wrote down the name of the book and went to a bookstore on the Monday, paying for your purchase in hard cash, it becomes real thing – and maybe you’ll even remember when you bought the book.
An interesting experiment would be to see how much less you spend if you used only cash for a week or a month – chances are your purchases would drop significantly, either because you didn’t have the money on you or you’re just more conscious about your spending.
You may also lose friends or make new enemies because if you insist on counting out the change in a queue for the cash till, you will discover the menace that coughing and heavy sighs can have behind you.
They’ve even come up with a name for the fact that people spend more freely with credit cards than cash – psychologists call it payment decoupling, which means you get to enjoy your new clothes or CD, weeks or months before you have to part with the money.
Essentially, we don’t see credit cards as “real money” – and using them as liberally as your lender allows you doesn’t cause you any real grief.
But a new study carried out at the University of Kansas and published in the Journal of Consumer Research takes this a step further by concluding that we buy fun stuff with credit cards and necessities or mundane items with cash.
“As consumers, our brains work in funny ways; we focus on benefits an item offers when we’re paying with plastic, and we focus on the costs when we pay with cash,” said Promothesh Chatterjee, professor of marketing at the University of Kansas and lead author of this study.
For more, read this week's Connacht Tribune.