WHY WE SPEND MORE ON CREDIT

Credit cards are more than just a convenient way to pay for things. They can also help keep track of what you’ve spent by providing an electronic trail of your money.  I like to do most of my spending electronically using internet banking, Bpay and credit cards so that I don’t have to keep notes or enter the transactions into my expense tracking system. I’m certainly not alone in this.

But there is a large body of research that would tell us that if you're trying to save money, leave your credit cards at home and stick to using cash.

Research reveals that we tend to spend:

• MORE when we use credit cards than when we use cash

• LESS when we look at our expenses in detail, rather than in summary

• LESS when we only have large denomination notes

• MORE when we use gift vouchers or other prepaid tools than cash

• LESS, the longer the voucher sits in our wallets

It appears that this difference isn’t just accounted for by the liquidity effect (in other words, it's not just because you don't have to