Could you go a week without spending cash?
Forty-three percent of Americans have, according to a Rasmussen survey released on Wednesday. The convenience of using a credit or debit card apparently is ruling consumer preferences.
But while leaving the house without cash may be convenient, paying with plastic can end up costing you. We tend to spend more when we buy things with a credit or debit card instead of cash, since our purchases become more divorced from the notion of how much they really are costing us.
Notes SmartMoney in a 2010 article:
Studies as far back as 1979 and as recent as 2008 have shown that consumers who pay with cards tend to spend more than those who pay cash. One theory holds that parting with cash is a vivid enough action to elicit a type of psychological pain and that card transactions are too abstract to be painful. In recent years, researchers have also focused on the biological underpinnings of impulse purchases the sensory glee that causes rational shoppers to buy things they might regret later.
When we pay with cards, the clear winners are the banks who collect fees every time you swipe a debit card or credit card. Of course, for those who spend more than they have--there are overdraft fees with which to contend.
Still there are many indications that the world is moving away from cash. Public buses in most Swedish cities do not accept cash and a growing number of businesses and bank offices in Sweden only take cards.
Last month, Canada announced it would cease production of its penny because the coin costs more to produce than it is worth.
Low-income people stand to lose the most as cash loses currency. One in 12 American households do not have a checking or savings account, which means no access to debit cards. An increasing number of Americans shut out by traditional banks are turning to prepaid debit cards, which charge high fees. The "unbanked" stand to get left behind by an increasingly cashless society.