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1.2. Credit cards vs. cash

There is a psychological difference between using a credit card and using cash. Paying with cash makes people more aware of the loss of money because they are physically handing it over.

Paying with a credit card, on the other hand, provides a kind of buffer against the realisation that it costs us money. The card itself doesn’t create as strong a link to money. The structure of the account means that we don’t have to use our own money for purchases straight away.

" Credit cards effectively anesthetize the pain of paying...You swipe the card and it doesn't feel like you're giving anything up to make the purchase, unlike paying cash where you have to hand over bills."

Economics and Psychology
Professor George Loewenstein