With Black Friday and Cyber Monday kicking off the holiday shopping season this week, get ready to whip out those credit cards. Or maybe not. 

Research finds that some ways of paying, including by credit card, can increase the amount of money people spend—and can lead them to buy more frivolous items.

With cash on the decline, the psychology of spending is more relevant than ever. That’s especially true considering that the newest ways of paying—mobile wallets and apps such as Zelle, Venmo, and Square Cash—may do even more to encourage overspending.

But wait. Can how you spend really change how much you spend? Academic studies reveal that people spend more money when they pay by card than when they use cash or a check.

Restaurant diners paying with plastic leave larger tips, for example. At the laundromat, people using cards rather than coins wash more, smaller loads.

The pattern isn’t just about credit cards letting people spend money they don’t have: Debit cards have the same effect.

Paying by Credit Card Is Too Easy

Nor are big spenders simply opting for cards over cash. Controlled experiments show that the form of payment can actually cause people to increase spending.

In one study at Massachusetts Institute of Technology, researchers asked business students to bid on Boston Celtics basketball tickets, telling some they’d eventually have to pay with cash and others they’d need to use a card. The average bid for those expecting to pay by card was $60, more than twice the average bid from those primed to pay with cash.

Underpinning such differences is what researchers call a psychological “pain of payment.”

“There’s just something painful about taking money out of your wallet,” says Priya Raghubir, professor of marketing at New York University.

When you hand over cash or a check, you part with something of value. Yet after you swipe a credit or debit card, you put the same object back in your wallet. Paying feels less real, which encourages more spending. 


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Paying by Smartphone Is Even Easier

New forms of payment may do even more to dull the mental connection between spending and having less money. In Raghubir’s research, she asked people to rate on a 100-point scale how similar credit cards are to cash, with 100 representing cash. The average response: 72. When she asked about Apple Pay, the average was 56.

Another study by Avni Shah, assistant professor of marketing at the University of Toronto, offers the first experimental look at the effects of paying by smartphone.

Shah told people they were spending $20 on headphones, signaling payment with cash, debit card, or phone. People primed to pay with a phone reported even less pain of payment than those paying with a card.

“You don’t really think about the outflow of money when you use a phone,” Shah explains. “It represents a social device, not a payment.”

In Shah’s experiment, phones also scrambled people’s perceptions of how much money was in play. For example, when Shah asked respondents what they might buy instead of the $20 headphones, some respondents in the phone group suggested outlandishly expensive items, including a laptop and an iPhone.

“People didn’t even have a sense of the amount,” Shah says.

Other research shows that how you pay can also change what you buy. For example, using a card in a grocery store can lead people to load up on “vice” products such as junk food.

“When you’re in front of the donuts, thinking ‘Should I buy this or not,’ pain of payment matters,” says Manoj Thomas, associate professor of marketing at Cornell University. “Cash makes you justify your purchase.”

That said, some people are more susceptible than others. Pain-of-payment researchers classify individuals as tightwads and spendthrifts. Tightwads feel the pain of payment more—and are less likely to splurge, even when using a card.

Make Paying More Painful

Whatever your temperament may be, there are steps you can take to limit how payment form influences spending:

Take your grandparents’ advice. Make a shopping list ahead of time, set a budget and stick to it, and, of course, pay with cash.

Force yourself to think about how much you’re spending. Not remembering dollar amounts goes hand in hand with reduced pain of payment. Jotting down money spent may reintroduce some pain through mental “rehearsal.” That can be especially useful if you keep shopping because the more you internalize spending, the less likely you’ll be to spend more. Signing up for transaction alerts from your card company or budgeting software can also make spending more salient.

Slow down the shopping process. People in a card mindset tend to make buying decisions faster—they aren’t stopping to consider whether the pain is worth it. Splitting up shopping across multiple trips may help spending sink in. Online shoppers should put items in their cart but not click “buy” until the next day.

Generating a little extra pain of payment may be worth it for another reason, too. Some of Shah’s other research shows that after experiencing pain of payment, people are more satisfied with their purchases and think less about what they didn’t buy. Thinking about parting ways with your money may not be fun—but neither is buyer’s remorse.