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How Not To Overspend In A Cashless World 

Rebecca Cohen  |  July 7, 2020

It’s easier to swipe than it is to part with cold hard cash. But in a world where apps and credit cards are king, how can we reign in our spending?

I picked up some sushi for dinner for my friends and me on Saturday night, and the process for the entire transaction was much different than it used to be. First, I placed my order on the restaurant’s online ordering platform so I wouldn’t have to go inside. Then, I selected the rolls and pieces my friends and I each wanted, and input my credit card information to pay for the meal. Then, I Venmo requested everyone in the group for their share… Then, with a mask on my face, I waited in line at the pick-up window where I was presented with my food and a receipt to sign. 

Millions of shoppers like me are staying away from person-to-person contact at restaurants and stores, requesting contactless credit and debit cards in droves. According to Visa, 63% of consumers are staying away from cash, and ATM use has dropped precipitously.   

And why? Because of the lasting fear of catching coronavirus. Even though health experts say it’s unlikely you will catch COVID-19 from exchanging green paper payments, this seems to be one of the ways the virus has expedited the use of technologies (see: Zoom, Peloton) that were ambling rather than racing into our world.  

One thing to consider as you tap your way into the commercial future: Is not physically holding and handling money going to lead you to spend more? We’ve written before about how we spend on credit more quickly than debit, and debit more quickly than cash. That’s because the more distant we are from the money itself, the less real it feels, and the more willing we are to part with it. As we increase the space between ourselves and our physical money, the onus will be on us to find other ways to keep ourselves in check. 

And this will be especially important because 30% of American adults have seen a decrease in their household incomes since the pandemic hit, which is causing savings to take a hit, per a Bankrate study. Nineteen percent of Americans have less emergency savings now than they did before (probably due to pulling out money to pay for things their income no longer can cover), and 16% of people have grown their debt in recent months. On top of that, 59 million people have lost money due to cancelled plans thanks to the pandemic, and only 30% of that group will get a full refund on their already-paid-for plans. 

On a more positive note, more than half of adults have cut spending during the pandemic, but that doesn’t mean they’re not spending at all. In fact, when they do spend at places like the grocery store or restaurants, they’re using their credit cards way more than they are using cash… So where does this leave us? 

Any time you make it too easy to spend, you make it harder to save,” says Matt Schulz, Chief Credit Analyst at Lending Tree. It’s great — seriously — that swiping is becoming increasingly easier, especially in a time when we are all so cautious about what we touch. But if you can wave your phone over a sensor to make a payment rather than reaching into your wallet for cash or taking a minute to write a check, you’re less likely to really think about what you’re doing, and the impact of the money you’re spending. 

Over the past few months, we’ve seen savings rates go up and credit card debt in general go down, explains Schulz, but that is only possible — specifically the drop in credit card debt — in times of harsh economic downturn. He noted that the only time we’ve seen this in the last 50 years has been during the Great Recession and the current pandemic. 

While those things are great, they won’t last forever. The world is opening back up, which means we now have so much more to spend on. Given the ease of spending thanks to contactless payment options, Schulz expects an uptick in credit card debt. “As cards get easier to use and things get more stable economically, people will spend more, as they go from self preservation to fun spending and spending on travel,” he explains. 

So how do you hold onto the super saver status you’ve worked toward since March? Think before you swipe (or tap, or click, or wave). It’s easier said than done, but it’s not impossible. 


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