As daily life becomes digital, spending is no exception. The coins collecting lint in your pocket could one day be an artifact to future earth-dwellers. But don’t toss your spare change just yet – in many ways, cash still runs America, with almost two-thirds of transactions $10 and under still being made in cash. But the globe is shifting towards a cash-free economy. Will you be ready for the digital shift?
Let's get digital
Netflix; Amazon; Uber; These digital disruptors have changed the way people are entertained, shop and travel. As online or app-based spending becomes the norm, having cash on hand doesn’t fit with the pace of modern life. A U.S. Bank survey of over 2,000 Americans found that half of people only keep cash on them half the time. When they do carry cash, a vast majority of respondents keep less than $50 on hand.
Payment apps such as Venmo are eliminating the concept of an old fashioned “IOU”- transferring money to your friend now is as easy as opening Facebook. Banking apps of all kinds allow you to monitor your personal finances at all times. But when it comes to spending in 2018, it’s still what’s in your wallet that counts.
In 2016, Walter Cavanagh of Santa Clara, California broke a Guinness World Record as the person with the most credit cards -- 1,497 to be exact. Cavanagh claims to maintain “nearly perfect” credit by keeping the credit limits on all of his cards as low at $50. While Cavanagh is truly “Mr. Plastic Fantastic”, the average American doesn’t keep quite so many cards on hand.
According to a recent Gallup poll, Americans carry an average of 3.4 credit cards—but that’s excluding the quarter of Americans that don’t have any credit cards at all. The reason for going plastic-less? Additional debt and bills. By keeping as many of your transactions cash-based as possible, you’re better able to feel the impact of your spending in the moment. Also, can you imagine how many bills are mailed to Walter Cavanagh’s house every month?
When it comes to credit cards, it’s all about balance. Keeping and using credit cards with manageable limits are crucial to building good credit – ensuring you’re a more desirable candidate for a loan down the line. But if you don’t manage your credit card spending, this can easily swing the other way: debt will pile up and your credit score will suffer.
The future of credit cards has arrived. Contactless payment is taking Europe by storm—and the U.S. is finally riding the trend. As soon as Americans got used to “dipping” chip cards into credit card machines, it’s time to “tap”. Contactless credit card payments use physical proximity to register purchases without punching in your PIN code or leaving your signature. It’s estimated that contactless payments take less than half the time of conventional credit card purchases. Already established within, growing numbers of U.S. credit companies are integrating this fast and easy technology. Although contactless payments usually have a limit, up to 30GBP in the U.K. for example, a contactless spending limit is yet to be introduced in America – so beware! Don’t let overspending be the true price of convenience.