The Easier It Is To Pay, The More People Spend
Many studies have demonstrated the greater willingness of consumers to spend when purchases are being made using credit instead of cash. But the psychology behind credit cards may run deeper than that.
Paying for something using a credit card is oh so easy. A swipe, a signature and that’s that – the reality of spending money may seem hazy given the absence of handling and counting out cash or subtracting a figure from an entry in a checkbook. Many studies have been completed which provide plenty of evidence that consumers spend more when shopping with a credit cards as opposed to cash.
A new study completed by the assistant professor of marketing at the University of Kansas, PromotheshChatterjee, and the chair and professor in the Moore School of Business at the University of South Carolina Randall L. Rose, that was recently published in the Journal of Consumer Research discovered that credit cards influence not only how consumers spend, but also the overall feelings about whatever it is that they are buying. According to the study, when purchasing using plastic shoppers tend to focus more on the positive parts of the sale while ignoring details such as cost and the necessity of the item. By not paying any mind to those important details, consumers overspend and end up buying unnecessary things.
Using a credit card at the register is considered to be an “abstract payment,” as opposed to the more tactile experience of pulling cash out from a wallet
According to Art Markman, the Professor of Psychology and Marketing at the University of Texas at Austin, “What happens when you think of things abstractly is you tend to focus on the overall benefits of something.”
This means that people buying items stuff with credit are concentrating on the benefit of what they are buying while not giving enough consideration to specifics like how they plan to pay for their purchase and whether or not they will actually use it.
Credit cards are so widely favored that they are increasingly replacing checks and cash. The advent of mobile wallets is effectively furthering the distance between cost and transactions and placing the burden upon consumers to tally up the amount being spent in their heads. While this won’t pose a challenge for everyone, people should be aware of the potential problems that may arise from this system. As technological advancements are making it easier and easier for consumers to pay, they are also making it easier for them to spend.
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