Credit & Debit Cards: Bad for Your Finances, and for Your Diet

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The arguments for becoming a cash-only consumer are well-known: Dishing out actual greenbacks feels more real than swiping a credit or debit card, and, say proponents of the cash-only lifestyle, as you count out the dollars and see them being taken away by a store cashier, you’re forced to pause, think—then, hopefully, reconsider—as you spend actual tangible currency on something you may or may not really need. Now, a new study shows that using credit or debit cards may not only result in the thoughtless purchasing of things you know you shouldn’t buy, consumers shopping with plastic are also more likely to buy foods they know they shouldn’t buy.

The big takeaway from study, published in the Journal of Consumer Research (hat tip to the Economix blog), is that the consumer is more likely to make poor, impulsive decisions when shopping with credit or debit cards. Those impulse buys might include a candy bar plucked from a tempting stack sitting next to a store cash register, or another cute handbag that you couldn’t pass up, and that’ll soon be sitting in a closet next to a pile of other cute handbags you couldn’t pass up.

Here’s the study’s main conclusion:

Four empirical studies were conducted to test the influence of mode of payment on the proportion of unhealthy food products in consumers’ shopping baskets. The results from all these studies offer convergent support for our hypothesis that card payments increase the purchase and, presumably, the consumption of unhealthy food products.

The paper also argues that if consumers want to avoid impulse buys—specifically for unhealthy food, but by extension clothing, gadgets, toys, the works—then it’s best if there’s some pain accompanying each purchase, as opposed to the often painless, often thoughtless act of swiping a piece of plastic:

Pain of payment can curb the impulsive responses and thus reduce the purchase of such vice products. Since paying in cash feels more painful than paying by credit or debit cards, paying in cash can reduce the purchase of unhealthy food items.

Interestingly enough, the paper’s introduction mentions that a sharp rise in obesity rates has coincided with the sharp rise in the usage of credit and debit cards for everyday purchases. No direct conclusions can be reached. But do you think this is mere coincidence? Could the use of plastic not only be a prime cause of debt, but also of fat?

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