Paper or plastic? I almost always choose plastic, as far as payment type is concerned. It’s a habit I developed years ago, as credit card companies fought for consumers using increasingly rich rewards. For me, it started with frequent flier miles—we paid for our honeymoon flights to Banff with our Worldperks miles.
When it became tougher to redeem airline tickets (and besides, with toddlers who flies much anyway?) I switched loyalties to cash-back credit cards, amassing such a collection in my wallet that for a time I jotted down the various offers in masking tape on each card. It’s June and we’re eating out? Reach for the card with the bonus in that category. Buying gas? Was it the American Express or MasterCard that earns three percent cash back?
Another child, and less spare time for tending to my peculiar hobby, I settled on the American Express Retirement Rewards card. It’s a straightforward, consistent two percent reward, which we’ve been using to slowly build savings in a Roth IRA. Last year, we saved more than $500 with this benefit.
I use the card everywhere American Express is accepted. That is, unless I’m at Starbucks, where I’ve become a regular only so I can use the gee-whiz technology of paying with my smartphone. I open up the Starbucks app, hit “touch to pay,” and wave the barcode of my electronic prepaid card in front of the card reader. It’s so slick that I don’t even feel as if I’m buying my black coffee.
And that’s the problem.
A recent survey from the American Institute of Certified Public Accountants found 56 percent of Americans say technology has made it easier to spend money, while 37 percent say technology makes both spending and saving easier. Just three percent said saving is now easier.
My family, which axed cable years ago because of its expense, is seeing our entertainment spending skyrocket, one dollar at a time. The ability to instantly download movies, books, and apps to our multitude of devices with one-click payment has curtailed the thoughtful moment we used to have while writing a check or counting change. Paying today is so fast and easy, we don’t have the time or will to ask: “Do I really need that?” “Can I afford this?” Or “Would I even buy this if I gave it more than a moment’s thought?”
Now I’m not pining for those Friday nights when I waited too long to hit Blockbuster, only to find the new release I was dying to watch was only available on Laserdisc. And it’s very convenient not to reach for a wallet when shopping online with a sleeping child on your lap.
Not only that, but technology has made consumers smarter about their financial state, providing real-time access to bank balances and budgets.
But making purchases in our one-click, pay-with-a-wave society is too effortless, too mindless. And it will only get worse as mobile wallet technology catches on.
My six-year-old frequently counts his money, separating his nickels, dimes, and dollar bills into neat stacks in order from highest to lowest value. He still refuses to believe that his million dollar bill wasn’t issued by the U.S. Mint, but he’s smart to develop a visual, tactile relationship with actual coinage. To him, money is real, something that must be emptied out at the register and meticulously counted. Only then will he be handed a new Lego set, packet of Pokemon cards, or bottle of soda.
Inspired, I used a wad of cash scored by the sale of some items on Craigslist to make all of our purchases for a few days.
I went to the mall, and felt a mixture of regret and apprehension when I handed over $79 for a blazer and a shirt that weren’t perfect fits. Then I felt a thrill realizing there would be no reckoning after the 25 day grace period, no calculating to see if and when we could pay the credit card balance in full without dipping into savings.
But the cash ran out, and so did my patience with the experiment. There wasn’t an ATM nearby. Plus, it’s easier to pay with plastic.