You’ve seen the ads: a circus act of food court commodities are passed around by a mash-up of merchants to the frenetic marching music of patrons efficiently paying for their delicious delicacies with their handy-dandy Visa cards. Like a well-oiled, money-sharing machine, these well-choreographed consumers pay conveniently with a single swipe of credit, serving up little wait in their collective go-go-gadget gaits and emphasizing, with every single swipe, the efficiency and speed of making everyday purchases with a Visa check card over cash or checks. This plastic parade ends abruptly when a lone cash-carrier has the audacity to pull out his greenbacks for one show (and music) stopping dark ages transaction. The record scratches. The cashier looks cranky. And the message is clear: in a world where plastic rules, only a party pooper pays with cash.
More and more, life does take Visa. And Mastercard. And Discovery. And a whole host of other plastic pinch hitters ready to step up to bat when your bank account can’t. This point is not lost on more and more savvy small purchase institutions and organizations. From cabbies to Salvation Army kettles, more and more businesses are getting into the single swipe game, and whether it's because of convenience or economic circumstances, Americans are taking the bait, at the expense of low credit card balances.
And for those Salvation Army kettles at least, these results are certainly panning out: national Salvation Army surveys show that people give more when they are allowed to donate with credit, sharing 750 percent more when paying with a card.
The science of our single swipe economy supports this trend. Following an examination of the brain and how people feel when they spend, Carnegie Mellon University professor George Loewenstein hypothesized that credit cards take away the pain of spending. From an article summing up Loewenstein’s work in Carnegie Mellon Today it was found that:
“[T]here’s a battle in the brain between immediate pleasure and immediate pain when we’re deciding what to buy. … The subjects in the MRI study weren’t thinking about what benefits they would gain at some later date if they chose not to purchase The Family Guy DVD set now. Rather, they were deciding based on how painful (or not) they thought paying for it would be right now.”
Combining the “feel-good” factor of plastic, the financially-strapped consumer population, and wide-acceptance of credit for cash, this looks like a recipe ripe for a consumer crisis that plays right into the hands of the credit card companies. So what should you do?
Try carrying cash-only.
Foregoing your credit cards for cash and carry—even for a few days—can make a huge impact in the psychology of your spending—bringing back the pain (and the gain) of using only what you have. While we remain disconnected from our spending with plastic, cash-only provides the necessary perspective that leads to healthy budgeting and better buying judgment.
Make room for fewer cards with lower limits.
When you do carry credit, only keep what you need for well-thought-out purchases and emergencies. With fewer cards and lower limits, you’ll rely more on cash, which could help head off budget-breaking impulse buys.
Plan through the pain
If the pain of past spending on plastic is getting you down, Chapter 7 bankruptcy is an option designed to quickly clear credit card debt. Click here for more information about how the bankruptcy experts at The Law Office of John T. Orcutt can help you out of your own personal credit crisis.