Consumers Spend Less When Using A Single Account, Study Finds

You have too many bank accounts.

That is, if you're trying to cut back on spending and save money. According to new consumer behavior research, the easiest way to stop overspending is to use only a single account.

In new a study to be published in the forthcoming issue of the journal Organizational Behavior and Human Decision Processes, researchers found that consumers who made payments from a single account spent 10 percent less than those who had access to multiple accounts.

The study divided 91 people into two groups and asked them to do some online shopping. One group made payments from a single spending account, while the other group had access to the same amount of money spread across multiple accounts. The latter group ended up spending more, the study found.

It seems fuzzy math is to blame for the difference in spending patterns. People have a hard time keeping their accounting straight when money is stashed in many different places, said researchers from the David Eccles School of Business at the University of Utah.

"People utilize the fuzzier representations from multiple accounts to justify desirable spending decisions," the researchers wrote.

The study comes as more consumers have access to a vast array of accounts to choose from when it comes to shopping. It's hardly unusual for a single person to have one to two checking accounts, a savings account, a PayPal account and multiple prepaid accounts. According to 2009 research from the Federal Reserve of Boston, consumers on average have five different ways to pay -- divided between cash, credit and other types of spending accounts.

Meanwhile, banks and other financial services companies are always on the hunt to sell consumers even more accounts, using incentives and program rewards to lure people to open new ones. Those companies, of course, typically profit from usage and transaction fees.

Even as consumers may feel that stashing cash across multiple accounts is a good way to divvy up spending money, debt and savings, the University of Utah researchers' findings suggest such a strategy could be doing more harm than good.

"If individuals find it difficult to consolidate money into a single account then they should try to reduce the vagueness," researchers said. They suggested one way to eliminate confusion: Aggregate all accounts into a single view -- a service many new budgeting apps can help with.