
Apparently, consumers spend more when they use a credit card in place of cash. I have read about this over the years and while I can't find hard evidence online backing this theory up, I have decided to do my own study.
We use a rewards credit card for almost every purchase we make. Every 12-14 months, we receive a rewards check for about $250 and put it into our vacation fund.
While $250 is certainly nice, it really isn't a lot of money anymore. Could I save even more money if we stopped using credit cards altogether and started using cash? By using a credit card, has it become too easy to put an extra book, t-shirt or bag of pretzels into my cart? And that pesky Target now offers 5% off when you use their Target Visa card on purchases at their store. The check that I write at the end of every month to pay off the credit card is not so nice.
How much money could we save if we start using cash? I have identified 3 categories that I am going to use cash for instead of handing over our credit card: groceries, restaurant meals and clothing. When I deposited our paycheck on Monday, I took out cash for these categories for the month.
These are categories that I feel I can reduce our spending. I let our grocery bill creep up this past fall. We enjoy eating out for dinner once a week, but those bills have also gotten a little high. We actually spent less on clothing in 2010 than 2009, but after looking in our closets, I just can't think of anything that we truly need. They are all pretty full.
My problem will probably be remembering to take the cash with me when I leave the house. I have used credit cards for so long that I'm not used to having cash in my wallet. I actually don't like carrying around a lot of cash. But I am committed to this experiment and I can't wait to see how well I do at the end of the month.
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