Tap and go technology makes paying for goods and services with your credit and debit cards much faster and more convenient. However, this clever payment innovation may sabotage your savings, according to new research from the Reserve Bank of Australia (RBA).
The RBA found card payments account for 52 percent of all transactions, up from 26 percent 10 years ago. Three in five card transactions today use tap and go technology, something that didn’t enter the mainstream until 2013. The number of cash transactions has fallen dramatically as we reach for our cards more often. Today we use cash for 37 percent of all our transactions, compared to 70 percent a decade ago.
As the rate of cash transactions has fallen, so have our savings balances. According to Donnel Briley, a marketing and behavioural psychology professional at Sydney University, that’s no coincidence.
He told Domain that we tend to spend more on impulse when we’re using cards than we do handing over cash. That’s because when we use our cards, it doesn’t feel like we’re using real money.
Of course, anyone who’s suffered a case of bill shock when viewing their card statements knows how real using cards can be. When you tap and go with a debit card, you’re likely to find your savings quickly depleted. When you tap and go on credit, you might find yourself with much higher debts than anticipated.
“The more coupled the costs and benefits are in a transaction the greater the pain felt and the lesser is the willingness to pay,” Associate Professor Anish Nagpal, a consumer behaviour psychology lecturer from Melbourne University, told news.com.au. “With these tap and go cards, it decouples the cost and benefits because you don’t see the payment going out of your pocket there and then and this bodes well for the merchants and consumers spend more.”
Whether you need to build your savings back up or repay large credit card debts, Chase Edwards’ financial experts are there to help. Call us on 1300 854 833 to learn how easily you can get your finances back on track.