Plenty of retailers are requesting card-only payments, and while this can be frustrating if you’re hoping to offload a handful of coins, the reality is that stores are free to choose their preferred payment method1. It turns out, there’s a strong case against cash in today’s environment.
Multiple studies confirm that notes and coins can be some of the grubbiest things we encounter on a shopping trip. One survey, which examined cash obtained from food outlets in 10 different countries – including Australia, found that the average banknote contains 26,000 bacterial colonies2.
It makes paying by card look very appealing. The downside is that EFTPOS PIN pads can also harbour hidden nasties, with COVID-19 among other things, able to survive on plastic surfaces3. This explains why contactless payments have skyrocketed globally4, and card issuers such as MasterCard5 have recently responded by raising contactless payment limits from $100 to $200.
Cards can encourage overspending
Reaching for a card instead of cash may benefit your physical health. But it’s not always so good for your financial wellbeing.
Paying with cash gives us a clear sense of having parted with hard-earned money – something that’s considerably watered down when we pay by card6. The problem isn’t just about the psychological disconnect from cash. US research7 shows that we’ve become conditioned to associate card logos with spending, and simply seeing card logos can stimulate a craving to buy something in much the same way that the smell of freshly baked bread can stimulate our hunger.
The upshot is that non-cash payment methods including digital wallets like Apple Pay, can be secure, convenient and hygienic. The catch is that they may increase the risk of overspending. Three simple strategies can help reduce that risk:
1. Reach for your debit card rather than a credit card – it’s an easy way to avoid paying interest on purchases.
2. Set up spending alerts – check if transaction notifications are available on your banking app. These send an alert to your smartphone whenever you make a purchase using the linked debit/credit card. It can be a handy reminder to ease back on spending.
3. Think twice about unplanned purchases – impulse buys can be a real budget buster. Always ask yourself if you really need the item, and shop around to be sure you’re getting value for money.
Cash is on the decline
Regardless of the Coronavirus pandemic, Australia has been moving to a cashless society for some time. These days we only use cash for 27% of purchases, down from 62% a decade ago. It’s a trend that’s likely to continue, spurred on by health concerns.
The good news is that when used sensibly, cards and other contactless payment options can help protect your physical health while also keeping your finances in great shape.
For tailored advice on sticking to a budget, give your local FinChoice Financial Adviser a call today. They can take a look at your overall financial situation and create a personalised and structured plan for you to achieve your goals.