But those who paid with credit card only wanted .83.
In a 2008 paper in the “the more transparent the payment outflow, the greater the aversion to spending or higher the ‘pain of paying’ …leading to less transparent payment modes such as credit cards and gift cards (vs.
cash) being more easily spent or treated as play or ‘monopoly money.’” Raghubir and Srivastava argued that using credit cards dulls the ‘pain of paying’ for two important reasons: (1) there is a separation in time between when the credit card is used to buy something and when the bill has to be paid; and (2) using a credit card allows different purchases to be mixed together.
In the context of donations, the authors found that those who paid cash were 9.9% more likely to donate again over the course of a year than those who donated using a credit card. The world is moving rapidly towards payment methods that are more and more convenient and less and less painful.
Stores encourage us to brandish our credit cards, and increasingly, to use our smartphones to pay in seconds with a click of a button.
There are many signs that the world is moving towards a cashless economy.
As just one example, a large study spanning 60 countries found that consumers made a total of 417 billion cashless payments in 2014, up from 311 billion transactions just four years earlier (or a third more, in percentage terms).
Other people can use a credit card without any of the ill effects outlined in the article. I put all purchases on my credit card (with the exception of eating in a small diner), to include payment to cable TV and cell service, and then immediately pay it off when it clears the pending category or well before the monthly due date.
I never carry a balance over into next month and get a percentage back, which I then funnel into a retirement account.
And we, in our naïve enthusiasm for speed and convenience, are adopting these payment methods uncritically.