Spending on plastic has taken over cash when it comes to spending according to a new report this week. This could be bad news for some as spending on cards can make it difficult to keep a track of spending.
A new report released this month showed that plastic has overtaken cash when it comes to paying for goods. The number of debit card purchases has also risen ten percent over the summer of 2010 compared to last year.
It’s easy to see how cards can be a lot more convenient than carrying cash – personally I don’t like to carry around a big bulky purse full on coins if I can just take one card out with me instead. However I have to ask what effect this increase in card spending has on people’s ability to manage their finances and keep a track of their spending.
The differences between paying with cash and cards
Whether it’s a credit card, debit card or a prepaid card, there’s no denying the difference between the process of handing over your shiny plastic to pay for your purchase and then putting it back where it belongs in your purse or wallet and the action of paying with cash and not seeing that £20 note again. Having said that it is possible to keep a track of your budget when spending on cards (prepaid cards in particular like the ClearCash card have built-in budgeting tools and text message balance notifications) but for a lot of people all they receive is their monthly statement in the post from the bank and a lot of these go unopened and ignored.
Cash used as a budgeting tool
To further illustrate the power of cash, the BBC3 programme “Spendaholics” from a few years ago used the tactic of showing the spendaholics their weekly outgoings in cash. When presented with this pile of notes laid out in front of them, most of the spendaholics were shocked at how much money they were spending. I’ve also seen spending in cash being used a tip for people trying to manage their money – take your cash for essentials out at the beginning of the week and stick to that set amount as your budget, the theory is that having a set amount of cash on you will limit any unnecessary purchases.
So, are you a cash or a cards type of person? Leave your vote in our poll above and if you have any budgeting tips of your own to add please leave a comment!