Credit cards make you spend more
It's official. We all knew it was true. We just didn't want to admit it. But research now proves that those who spend cash are likely to spend less than those who whip out the plastic. It's simple. When you are spending with a credit card, it's much easier to exceed your budget or your initial intentions.
Even those who think they're responsible with credit cards are still losing out when they use the plastic. The responsible ones think that by paying off their balances each month and not incurring interest charges, they're doing just fine with their credit cards.
Not so, say Drazen Prelec and Duncan Simester of the Sloan School of Management at MIT. Even when you're exhibiting what appears to be responsible credit card behavior, there is a big chance that you're spending more than you would have if you were paying for things in cash.