Credit Cards Encourage Spending More Image courtesy of
A 2001 MIT study published in Marketing Letters found:
In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints.No wonder Dave Ramsey encourages people trying to get out of debt to cut up their credit cards.
A 2001 MIT study published in Marketing Letters found:
In studies involving genuine transactions of potentially high value we show that willingness-to-pay can be increased when customers are instructed to use a credit card rather than cash. The effect may be large (up to 100%) and it appears unlikely that it arises due solely to liquidity constraints.
No wonder Dave Ramsey encourages people trying to get out of debt to cut up their credit cards.
Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay [Marketing Letters via Poorer Than You]
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