You know what they say about beauty and the beholder? It apparently lies in the eye of the cardholder too.
That’s according to new academic research that shows consumers who pay with a credit card focus on the benefits of a purchase, while those who pay with cash concentrate on its cost.
A take-away for consumers is that using credit cards can be dangerous to your wealth for more subtle reasons than paying finance charges on balances. It can affect not only how much you spend, but what you buy.
The new research comes from Promothesh Chatterjee and Randall Rose in a study, “Do Payment Mechanisms Change the Way Consumers Perceive Products?” to be published in an upcoming issue of the Journal of Consumer Research.
When it comes to credit cards, it’s well established in the field of behavioral economics that people who use plastic are unconsciously willing to spend more than those who pay with cash, a phenomenon known as the “credit card premium.” That’s because there’s an emotional pain associated