Credit Cards Versus Cash

recognize Cards Versus CashThis paper talks near consumers preference in purchase ingatherings by coin or by recognition invoice bet on. Credit tease chip in become important in consumers lives and view as changed the way they behold growths. During the onetime(prenominal) few years conf engrossd things hire occurred which has made the world change drastically. Technology is being au in that locationforetic each day by producing different crossroads which ar making populates lives some(prenominal) easier. So has the belief of buying products by acknowledgement tease. The 2000s was the arc jiffy where address add-ins became popular and important to consumers (A Decade of Cards, 2000-2010 and beyond). Credit tease have become an alternative way to feed from the simplest products to the most important ones. The fill to put all the wagess in one simple card has been a grand benefit for consumers. This was proved when in 2010 immediate wages fell freig hter debit entry cards, making debit cards consumers favorite way of nonrecreational for products for the first time in history (A Decade of Cards, 2000-2010 and beyond). Credit cards have become extremely important to consumers and the dissimilaritys between paid(a) with nones or with address cards have been look intoed by many pot who have given authoritative record to these 2 ways of purchasing products.Since 1970s there have been facts which lot have supported that realization cards increase s arrive atging (Prelec Simester, 2000). As a standment tool the use of creed cards increases the take to the woodsency to spend to a greater extent than than on products than gold does (Chatterjee Rose, 2011). When book of facts cards atomic number 18 practically available consumers pretend mostly nigh the products benefits than the be of the products. Conversely, when notes as a hire is more available consumers place more importance on the court of the p roduct than on the benefit of it (Chatterjee Rose, 2011). Many examples have given sure evidence to the theory that mint who use source cards spend more. Examples such as restaurants earn more tips when consumers wear with cards, some consumers stymie the amount of gold they spend on various products, and they tend to secure more in every department store, be facts rivald to the evidence that people really do spend more when apply ac character cards (Prelec Simester, 2000). High calorie solid sustenances, mostly junk solid food be becoming more dearly-won everyday and this is not just because of the economical way to motivate consumers extract but likewise a psychological motivation that overhears consumers have risquey calorie foods with pleasure (Bagchi Block, 2011). So when the salute of a product is high, such as paying with gold, if we increase the benefits of that product there will be little pain of the payment (Bagchi Block, 2011). in that respe ct is a variation in the countries worldwide who are cardholders particularly differing from those countries that are more developed than the little developed countries (A Decade of Cards, 2000-2010 and beyond). Income is an influence on deferred payment card holding to those countries that are more developed such as the south east and some places in the north watt since these places have the high-riskgest credit cards per adult (A Decade of Cards, 2000-2010 and beyond). Credit cards are mostly used in purchasing food where the voice of spending with cards in this area has grown in the past three years to 36% (A Decade of Cards, 2000-2010 and beyond). In the UK cards have had a huge influence in charity because by utilize credit cards humanity is gro inveigleg even more in spite of appearance people (A Decade of Cards, 2000-2010 and beyond). An example of this is some cards that are named with a charitys name these companies draw donation whenever the consumer uses his/her c ard or even when they open(a) an account for the first time (A Decade of Cards, 2000-2010 and beyond). Another way of people being voluntarily helpful for charity is online grown where the charitable peaks are increasing year by year (A Decade of Cards, 2000-2010 and beyond). now consumers are ontogeny credit cards instead of silver in every purchase they are making. Their preference is mostly on credit and debit cards rather than bills or checks (Consumers prefer formative to paper payment, 2004). In 2003 cards were used for 53 percent of purchases, man property or checks were used for 47 percent (Consumers prefer pliable to paper payment, 2004). Companies dealing with credit cards are enhancing their usage by marketing new cards that perform like currency and dont originate use up charges like credit cards do (Consumers prefer plastic to paper payment, 2004). Furthermore, companies are trying to desexualize different industries offer their consumers the weft o f paying with credit cards (Consumers prefer plastic to paper payment, 2004). introductory researches have figured out that when consumers bemuse a decision slightly a product, credit cards encourage them to spend more than cash does. However, they have not yet discovered whether cash is an influence towards the choices of products (Bagchi Block, 2011). So the studies provide evidence that people consume more calories and impute high costs when purchasing with cash rather than a credit card (Bagchi Block, 2011). Nevertheless, when consumers are grocery shopping they tend to purchase more food when using credit cards since the greater the legal injurys of food, the greater the indulgent of the like food (Bagchi Block, 2011). The way consumers experience the payment of products strengthens the different ways they pay- cards or cash (Bagchi Block, 2011). As a result, consumers think of cash real bullion and spending cash is more important. The more real the sledding of mone y such as cash payment, the greater is the pain of giving the money for a product. On the contrary, credit cards are more looked as less hurtful and are spent more well because you dont see the money sometimes they may even be enured as play money (Bagchi Block, 2011). Thus, imputed cost are greater when using cash because the greater the imputed cost of spending, the greater is the chance to choose high calorie food (Bagchi Block, 2011).The advantages of using credit cards is the ability of paying for a great period meaning that you can purchase as ofttimes as you want and pay later with no interest charge (Cohn, 2010). This lets your money stay in the bank and earn interest as well as making you more flexible with cash flow (Cohn, 2010). Credit cards also have reward programs which consumers are benefiting. For example, a financial planner Frank Remund used his visa hint card to purchase a product. While calculating what he had make and what he had saved using discount coup ons he stated that he paid only $380 for the product which is actually sold for $800 (Cohn, 2010). Moreover, by using his card he managed to increase his warranty period (Cohn, 2010). The other huge advantage of using credit cards is the security that they hold. By carrying big cash with you, there is more possibility for the money to be stolen from you. However, if your credit card is stolen your liability is restricted at $50 and if you have been a loyal customer to the bank, they will credit your account in no longer than a few days (Cohn, 2010). Moreover, if the product you purchased happened to have a problem or you simply arent satisfied with its quality, then if you have purchased it with your credit card there is more likelihood for you to return it than there would be if you had bought it by cash (Cohn, 2010).Nevertheless, except for the many advantages credit cards have there are also some disadvantages when using credit cards. ane of the disadvantages of credit cards are high interest charges (Compare Credit Cards). Credit card companies usually charge high interest fees like 20% for the purchases that havent been paid in months (Compare Credit Cards). Another huge disadvantage for credit cards is the temptation to overspend. Many people have unwieldyies in managing their money so when they pay with credit cards they tend to overspend without opinion further. Because credit cards allow you to spend money and not pay them upfront, people light too excited and think just for that moment so they tend to for see about paying them later on (Compare Credit Cards). Furthermore, it is more difficult to remember what you have purchased when get with credit cards. So, if you have taken too long to pay for the purchase you mightiness be surprised when the bank informs you for the amount of payment you have to make (Compare Credit Cards).Three samples show consumers behavior towards credit cards and cash. Consumers prime with credit card as a payment mec hanism make more recall errors with respect to cost-related aspects of the product than to benet aspects ( teaching 1), identify more words related to benets ( champaign 2), and respond faster to benet-related words ( report card 3) than consumers primed with cash concepts (Chatterjee Rose, 2011). In the fourth experiment, we look thoroughly through the outcome of the payment prime to the choices of the products (Chatterjee Rose, 2011). Consumers using credit cards have more possibilities in looking at the products with greater benefits, whereas consumers using cash mostly choose the options that are ruled by cost even if there is less benefit of that particular product (Chatterjee Rose, 2011). Considering these four experiments, consumers distinguish the same products in different ways when choosing to use credit cards rather than cash (Chatterjee Rose, 2011). Furthermore, credit cards increase the alertness of the benefits of products in that way persuading the military rese rve price and product valuation and also making consumers choose the options of products more attractively (Chatterjee Rose, 2011). For consumers, products have a different meaning when they are bought with credit cards and when they are bought with cash. Thus, the credit card superior is not cod solely to differences in decoupling from pain of payment (i.e., reduced salience of costs) or to physical form, but in addition, the salience of product benets is enhanced when sentiment of paying with credit (Chatterjee Rose, 2011). If consumers goal is saving money, then the cost of the product becomes more important than the benefit the product carries. However, if the consumers goal is to purchase a product with high quality that is beneficial for the consumer, then the cost of the product will be less important thus becoming more psychologically relevant (Chatterjee Rose, 2011).In order to prove that people use more calories and impute higher costs when buying with cash comparati vely to credit cards, a study in a frozen yogurt retail store was experimented (Bagchi Block, 2011). 125 customers were recruited in a substitute of $1 discount of their next purchase and only the ones who bought a product for themselves were allowed to be a part of the survey (Bagchi Block, 2011). After customers ordered and purchased their products, the nutritional set of the products purchased by the customers were calculated and used as an evaluation of indulgence (Bagchi Block, 2011). In this study the customers were asked to declaim about the price they paid for the products purchased, whether they thought it was expensive or not, and the method of payment (Bagchi Block, 2011). The results of the study showed how consumers that paid with cash did not pay more than those that paid with cards. However, consumers though that the imputed cost was much higher when buying with cash than credit card since their products seemed more expensive to them (Bagchi Block, 2011). This study explained how buying with cash feels more expensive and more hurtful than buying with credit card (Bagchi Block, 2011). Moreover, the costumers knew the method of payment before they purchased the products so this shows that customers were aware of the method they will use to pay for the products (Bagchi Block, 2011). Therefore, it is doubtful to state that the choice made for the food purchased had an affect on the method used for paying the product.After the study made with the yogurt retail, another study was conducted on a caf study for credit versus cash. In this study 147 students were taken and asked to tell their last time they purchased a product for $10 or less and to choose a product from the restaurant that cost $10 or less (Bagchi Block, 2011). Further, the students were asked whether it was difficult to decide n their purchase and this was used for the study as a result of imputed cost (Bagchi Block, 2011). The results showed that consumers who paid with cash chose more calorie food than those who paid with card. Moreover, evidence showed that paying by cash created more indulgence than paying by card (Bagchi Block, 2011). Both study one and study two showed that theorizing is predicated on differences in pain of payment, or imputed costs associated with cash versus credit, rather than on the method of payment per se (Bagchi Block, 2011).There are other studies that show the willingness of consumers to purchase more products when using credit cards. In these studies two ways are mentioned in astute whether the effect is relevant only when the price of the product is uncertain or when the prices are known (Prelec Simester, 2000). The first study had to do with prices being uncertain. The experiment had to do with tickets for a sporting event where one ticket was for the game between Boston Celtics and Miami heat, whereas the other ticket was for the Red Sox and the Toronto Blue Jays (Prelec Simester, 2000). The people experimented w ere the MBA students. They were asked to enter a room and fill in their own tatter about the reservation values and then they would have the opportunity to win the tickets. Further on, the one that wrote the highest value would get the revalue however the prize would be sold at a price identical to the spot highest value (Prelec Simester, 2000). After that, two sheets were handed- cash condition sheet and credit card condition sheet (Prelec Simester, 2000). In the first sheet, it was required for the winners to make the payment with cash whereas in the second sheet the winners were asked to make the payments by credit cards. In the first sheet they were also asked whether they had access to cash machine and in the second sheet they were asked to tell the type of card they used and some information about the card (Prelec Simester, 2000). The result of this experiment showed that those who were asked to make the payment by credit card wrote down much higher values for the three tickets and the highest amount of money was for the Celtics tickets, whereas for the banners it was the smallest (Prelec Simester, 2000). In the second experiment, the prices are certain. This allows us to evaluate whether the credit card premium arises because customers fructify their valuations from different anchoring points in the cash and credit card conditions (Prelec Simester, 2000). For example, in the cash condition consumers might emphasis more on the amount of money they carry in their pockets. Whereas, in the credit card condition they focus on their credit limit or even their monthly bill (Prelec Simester, 2000). In the second study students of MBA were respondents and this time they had a chance to win a dinner certificate costing $175 (Prelec Simester, 2000). The steps for this price were to draw numbers randomly from zero to the price of the certificate and then choose a student randomly. Students were divided into groups depending on who will pay with cash and who with credit card (Prelec Simester, 2000). In this study the result was that there was no huge difference between credit card and cash conditions (Prelec Simester, 2000). Moreover, payment had a huge effect but only with those students who faultless the credit card digits (Prelec Simester, 2000). Students who stated that they will pay with credit cards wrote down values 36% more than those who didnt (Prelec Simester, 2000). Therefore, the main effects of payment method and identification method were not significant (Prelec Simester, 2000). The information about the market price varied from the first study and the second one. This difference was taken for a reason to see whether credit card premium arose because consumers regulate their estimation of cash and cards in different batch (Prelec Simester, 2000). These two studies offer an idea as to the reason of the effect. They reveal the idea that consumers are more willing to pay with credit cards than they are with cash (Prelec Simester, 2000).The studies illustrate how credit cards make peoples decision much easier when purchasing a product. When people purchase with cash they find it difficult to buy expensive products since they can see their cash. However, with credit cards you dont get to see your cash, you just see a plastic card that sometimes makes you forget how much money you are spending. Moreover, through the studies we understood how consumers perceive products differently when purchasing with cash or with credit card. Those that purchase with cash are more likely to give more importance to the cost of the product than to the benefit and quality of the product. In contrary, those that pay with cards tend to give more importance to the benefits the product gives them than the cost of it (Chatterjee Rose, 2011). Further on, the willingness to pay grows when consumers pay with credit cards and this was shown in the two studies taken with the game tickets and the prize of certificate (Pr elec Simester, 2000). How much consumers consume food with high calories was also examined with the methods of payment- credit and cash. Studies showed that those who purchase with cash consume more calorie food whereas those who purchase with credit cards consume less calorie food (Bagchi Block, 2011). When imputed costs are high, consumers indulge more. These imputed costs vary with the payment style and also with how difficult it is to earn money. Thus, spending with cash (vs. credit) and spending cash that is more difficult to earn (rather than less difficult) result in more indulgent, high calorie food consumption (Bagchi Block, 2011). In the near future, engineering will find its way in replacing credit cards by mobile phones since they will be the factor that will renew peoples wallets (A Decade of Cards, 2000-2010 and beyond). So, people will not have to carry their credit cards anymore since their mobile phones will have the ability to make a purchase either through cr edit or debit (A Decade of Cards, 2000-2010 and beyond).The research of credit cards versus cash help people sympathise the advantages and disadvantages each one has. Moreover, they explain how and why consumers behavior towards these two methods of purchasing changes when purchasing particular products. Further research should be conducted in order to see which one is better and safer to use. Research such as planning different surveys for consumers to answer their choice of the method of buying would be helpful in understanding consumers choice as well as reasons towards their decision. Furthermore, in order to research this further we should gather all the studies conducted and relate them with one another. In this way we will be able to understand more precisely the usage of credit cards versus cash by consumers. One last reason to research this further would be the development of technology. Since technology is changing rapidly, it will change the usage of cardholding. Therefo re, research on future technology and how it will have an impact in the market area will be needed to be made. This way we get knowledge as to how things will change and whether it will be a positive or a negative thing for consumers to make purchasing decisions through their mobile phones.