What to Know:
Research suggests people often spend more when they use cashless payment methods.
Handing over cash can intensify the psychological “pain of paying,” making each purchase feel more tangible.
There is no need to abandon digital payments; adding more visibility and friction to cashless spending may help keep it in check.
Consider this challenge: For one week, pay cash for every expense — bills, groceries, gasoline, takeout, restaurant meals, entertainment and everything else.
No credit cards. No debit cards. No app purchases tied to a card or bank account. For seven days, use physical cash for every single thing you buy.
Good luck.
If you gave the idea even a moment’s thought — and I know I couldn’t manage it — you may have felt a little uneasy about just how many everyday expenses no longer involve physical money.
Bills are automatically withdrawn from bank accounts. Most in-store purchases are covered with a credit card or a tap of a phone or smartwatch. Your rideshare app has your card details on file. So do favorite retailers, streaming platforms, the gym, cloud storage services and a half-dozen other subscriptions quietly billing you month after month.
We still describe it as “spending money,” yet there is increasingly no cash to see, hold, count or hand over. That leads to a compelling question about digital spending habits: When paying no longer feels like spending, are we likely to spend more?
Yes, We Really Do Spend More Without Cash
Turns out, there’s a name for this: the “cashless effect.”
Researchers have been studying the idea for decades: does the way we pay change how much we spend? In 2024, much of that work was pulled together in a sizable analysis of 71 papers covering more than 11,000 participants and 338,000 transactions across 17 countries. The conclusion: consumers tend to spend more when using cashless methods than when paying with cash.
But if you’re looking for a quick way to save money, don’t go cutting up your credit cards just yet.
The researchers also found the overall effect was small – paying without cash doesn’t suddenly turn a careful spender into a reckless one. The size of the effect also varied considerably depending on the circumstances.
As an example, there was a stronger cashless effect when people were making what researchers called “conspicuous consumption” purchases – think a luxury car or fine dining – compared with purchases that aren’t typically used to signal wealth or status. Researchers also found something particularly interesting after examining the dates of the underlying studies: the cashless effect has been getting smaller over time.
That may sound counterintuitive. We’re using cashless payments more frequently, so wouldn’t the effect get stronger?
Nope – researchers suggest the opposite may be happening.
Paying with a card was once a distinctly different experience from handing over cash. But today, cashless payments are routine: we swipe cards, tap smartphones and watches, shop online, and order through apps without giving the payment method much thought. As we’ve become more familiar with cashless spending, we’ve also become more comfortable with using it. That may be narrowing some of the psychological difference between paying with cash and paying without it. In other words, as cashless spending becomes more familiar, the cashless effect may be shrinking.
Shrinking, but it hasn’t completely vanished.
The Pain of Paying
Why should the way we pay matter at all? After all, $20 is $20 whether you hand a cashier a twenty-dollar bill, swipe a debit card, tap your phone, or click “buy now.”
Yes, when it hits your bank account, $20 is $20, but psychologically, those transactions don’t feel the same.
Behavioral economists have a wonderfully descriptive term for what happens when we part with money: the “pain of paying.” A recent study using brain imaging found that spending money activated areas of the brain involved in processing the emotional component of pain. I call it being broke, but that’s just me. All kidding aside, cash makes that loss particularly difficult to ignore: pull $80 out of your wallet to pay for dinner and you can see what you had before the meal – and what you have left afterward.
Credit cards and digital payments change the experience. Tap-to-pay can reduce it to a second or two. Buy through an app with a stored payment method and you may barely interact with the payment at all.
New research suggests that distinction still matters.
A large 2026 study involving more than 32,000 people revisited the long-standing theory that paying with cash feels more painful than paying with a card. Researchers found that cash still produced a greater “pain of paying,” even among consumers who have grown accustomed to cards, digital wallets, and other cashless payment methods.
More importantly, that difference wasn’t merely about how people said they felt – researchers found that payment method could affect how much people spent, with the pain associated with paying helping to explain the difference.
That doesn’t mean every tap of a credit card sends you on a spending spree, but it does mean cash gives you something many modern payment methods don’t: friction.
Cash. You have to get it. Count it. Hand it over. Watch it disappear.
And increasingly, we’ve engineered all of those steps out of spending money.
Want to take back control? Here are some ideas for how you can rein in your cashless spending:
Make yourself see the money: Turn on transaction notifications for your credit cards and bank accounts. That $14 lunch feels a little less invisible when your phone immediately tells you that you just spent $14. And don’t just rely on your credit card statement at the end of the month: check your transactions regularly. One of the advantages of digital spending is that every purchase leaves a record – but that record isn’t particularly useful if you never look at it.
Make spending a little harder: Consider removing stored credit card numbers from the websites and apps where you’re most likely to make impulse purchases. Having to find your wallet, pull out the card, and type in the number takes a little more time and slows the process down. And that’s the point.
Use cash: Well, duh! If there’s one category where you consistently spend more than you intend – restaurants, entertainment, coffee, clothes, whatever your weakness happens to be – try using cash just for that. Set aside a certain amount at the beginning of the week or month. When you spend it, you can physically see the amount getting smaller. And when it’s gone, it’s gone.
You don’t need to give up credit cards, delete your digital wallet, or start paying the electric bill each month with a stack of twenties. The point isn’t that cash is better; it’s that cash naturally forces us to notice something technology has become remarkably good at hiding: spending money.
So maybe that experiment we started with isn’t such a bad idea after all. But how about this: don’t try paying for everything with cash for a week – just pick one thing. Eating out, coffee, entertainment, clothes, or whatever category seems to make your money disappear: use nothing but cash for it for a week. See whether you spend money differently when buying something requires you to reach into your wallet, count it out, hand it over, and watch what’s left get smaller.
You may discover that the most useful thing about cash isn’t the cash itself – it’s the moment it makes you stop and think before you spend it.
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