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How Online Payments Changed the Way We Spend

Long gone are the days when you had to go to the bank teller to withdraw the cash you needed for groceries, entertainment, clothes and other expenses. With debit cards, credit cards and electronic wallets, you can spend your money anywhere, anytime, without actually seeing it physically move from your hands to someone else’s. While this might not seem like a big deal, the move from cold, hard cash to digital dollars has actually had a dramatic effect on our spending habits.

In a March 2009 Family Circle article, “Where Is the Money? How to Control Electronic Spending”, Mike Peterson, cofounder of the American Credit Foundation, states “When you use cash…you know the money is finite. Electronic payments take away that tangible feeling of spending, so it’s harder to keep a lid on expenses.” This can not only lead to growing debt, but also to a growing disconnect between our earnings and our perception of how much we actually have to spend.

5 Ways to Limit Overspending

To help you re-establish the connection between your money and your perception of it, here are 5 points from the informative Family Circle article:

  • View your bank and credit card statements regularly: This will help you track your spending, and get back that awareness you had when spending actual cash. There are many mobile and online banking options available that give you instant access to your account information.
  • Pay your credit card balance early: Don’t wait until the last minute to pay your balance or monthly minimum as doing so only a few seconds late could lead to a late payback transaction. That could mean added late fees, higher interest and a hit to your credit rating.
  • Open all of your mail from the companies you pay: If you make pre-authorized payments to a company each month, you should still make it a point to read all their notices carefully even if you feel they’re just junk mail. Service companies can easily overbill you and if you don’t check your statements, you’d never know.
  • Say “No” to store credit cards: Even though you may get a small discount off the ticket price, you won’t really save any money because all that savings will disappear to high interest rates. It’s also important to note that the more credit cards you have, the lower your credit rating.
  • Just use cash: Whenever you can, keep paying the old-fashioned way. Once or twice a month, withdraw the cash you’ve budgeted for items other than bills, this way you can make your spending and budget more tangible. You will tend to spend less with cash since you actually see the money leaving your wallet. You’ll also save money by not paying fees for every credit or debit card transaction.

For more ways to stop overspending, see 5 Ways Prepaid Cards can Limit Debt.

Image courtesy of Gregory Szarkiewicz /

  • Davids

    The withdraw money when it’s available?