ORLANDO, FL (Ivanhoe Newswire) – For the first time in our nation’s history, credit card debt has topped one trillion dollars. The average American opens their first credit card at the age of 20, and most people’s average running balance is $5700. But not paying that balance off every month can keep you in the red for life. That’s why some experts are recommending a cash diet for consumers.
When it’s time to make a purchase, do you reach for paper… or plastic? Studies show the average American carries $67 on them, but still uses plastic one out of four times when buying something under $25; and now, with the ease of digital wallets, it’s getting easier and easier to go cashless and harder and harder to control our spending.
If you want to reset your finances, some experts recommend a cash diet. The idea is that using only cash for a set amount of time can help you be more mindful of what you spend. Several studies have shown consumers feel more pain when paying cash than credit. The average value of a cash transaction is $22 compared to the average value of a credit card transaction at $57.
To try a cash diet, first decide how long you plan on going all cash – whether it’s a week, a month, or longer. Experts also suggest coming up with a budget and dividing your cash into envelopes for spending with categories like groceries, gas, dinners, and miscellaneous items. At the end of your trial period, compare your spending to what it was with credit cards and decide if paying by cash can really help you save.
A recent study published in Frontiers in Psychology found that people derive pleasure from purchasing items with their phones, possibly because they associate positive experiences with using other apps on their devices.
Sources:
https://www.lendingtree.com/credit-cards/credit-card-debt-statistics/
https://finance.yahoo.com/news/jaw-dropping-stats-state-credit-130022967.html
https://upgradedpoints.com/credit-cards/credit-spending-facts-statistics/
Contributors to this news report include: Julie Marks, Producer; Roque Correa, Videographer and Editor.
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