Is it time to go back to cash?

We used to keep our bank cards for big spends. Th­ese days, we flash the plas­tic for the small­est of pur­chases. But could this be bad news for our fi­nances?

Prima (UK) - - Contents -

With more and more of us spend­ing money with the wave of a card, a re­think may be in or­der

How much money have you got in your purse right now? The lat­est re­search has found that al­most half of us carry less than £5 around with us, with Bar­clay­card re­port­ing that 70% of peo­ple are now us­ing con­tact­less cards for pur­chases un­der £30. And it’s not sur­pris­ing: why fum­ble for notes and coins when you can sim­ply ‘wave and pay’ with con­tact­less?

But there’s emerg­ing ev­i­dence that sug­gests our over­re­liance on cards may not be good for our bank bal­ances. Stud­ies have found we spend more freely with cards than with cash, which might be why two out of ev­ery five re­tail­ers plan to be cash-free in the next five years. Psy­chol­o­gists have also found a fas­ci­nat­ing curve­ball: spend­ing cash can feel painful, which puts us off us­ing it.

‘Hand­ing over phys­i­cal money can feel more tan­gi­ble and “hurt” more than swip­ing a card,’ says fi­nance ex­pert Jas­mine Bir­tles (mon­ey­mag­pie.com). ‘With plas­tic, you swipe and don’t think much about it – it’s al­most as if you’re not spend­ing real money.’

Pay­ing with cards isn’t inevitably painfree, of course. If you’re not care­ful, you can lose track of what you’re buy­ing and spend more than you can af­ford. Cards can be haz­ardous for some­one who piles up credit-card debt or reg­u­larly hits over­draft fees.

That’s why the lat­est think­ing is that it might be smart to fall back in love with cash – and em­brace its in­con­ve­nience. ‘Cash slows you down – and this can be a good thing,’ be­lieves Jas­mine. ‘With­draw­ing cash can be an eye-open­ing ex­pe­ri­ence. De­cid­ing how much you need makes you think about your bud­get. It can feel dif­fer­ent from the al­most hap­haz­ard method of throw­ing a card at ev­ery ex­pense that comes up in your daily life.’

There are other ben­e­fits, too. Us­ing cash can help you over­come urges to buy on a whim. ‘Ex­pen­sive im­pulse pur­chases are less tempt­ing when you’ve got to search for the money in your purse. De­lay­ing a pur­chase of­ten gives you valu­able think­ing time to ques­tion whether you re­ally need the item.’ The good news is that to help gain back con­trol of your spend­ing, you don’t have to bin all your cards (un­less you want or need to). The fol­low­ing strate­gies could help make your bank bal­ance health­ier and change your re­la­tion­ship with money for the bet­ter.

Time to be­come a fan of cash again!

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