According to a recent study at the University of Ohio, the answer is that people tend to spend more when they are paying with credit cards rather than legal tender, the Post reports.
This is not to say that credit is inherently dangerous or that applying for a student card will necessarily lead to credit card debt. However, it does emphasize the importance of using your plastic wisely.
The researchers compared the spending behavior of students using different forms of payments: credit cards, cash and gift cards.
Generally, the participants who used cash were more careful about their spending behavior than the other groups.
“With credit, you remove the money part of it and you don’t have to deal with it for another month, whereas with cash you’ve got it right there,” Ohio University marketing professor Jane Sojka told the news provider.
However, these findings should not suggest that you give up using credit altogether. In fact, obtaining and using a credit card responsibly is one of the most important things you can do to build up your credit rating – which can benefit you in countless ways throughout your life.
Key factor: responsible use. That means paying bills on time and not accumulating credit card debt beyond your means.
Be aware that some companies try to take advantage of college students by offering incentives for signing up for a card.
Some lawmakers are taking action to prevent this type of abuse. For example, Illinois State Treasurer Alexi Giannoulias has proposed legislation that would ban on-campus promotions for cards.
“[These practices create] a perfect storm when you consider many students don’t have a steady source of income and are more concerned with current costs than dealing with their long-term debt,” he said in a news release.
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