How Plastic Cards are Ruining Your Finances
Your plastic bank cards are ruining you.
Those small rectangles in your wallet might seem harmless, but, without even realizing it, your debit and credit cards have trained you to develop unhealthy behaviors.
Cards put up a barrier between your money and your life. Spending (or saving) your money is an expression of your wants, desires, goals, fears, and needs. It changes based on life circumstances, experiences, and context.
A plastic card isn’t smart enough to understand that.
Here are the two big ways that plastic is destroying your financial health.
1. It’s Inconvenient
Humans have gone from bartering livestock, to trading gold, to using coins, to swiping plastic. And contrary to popular beliefs, plastic is actually extremely limiting.
In a world where there is always “an app for that”…plastic just doesn’t cut it anymore. It’s limiting. It cuts us off from our finances, and keeps us blissfully ignorant of our realities. Plastic cards are one of the last great barriers preventing us from living rich, connected lives.
Our smartphones have become part of us. Christine, a PR specialist, explains it perfectly: “To be honest, I don’t vividly remember the day I first got a smartphone — I only know that I find it hard to remember my life without it. It not only goes everywhere with me, it’s become central to my lifestyle.”
In just one year of offering mobile payments, the Starbucks mobile app accounted for a quarter of all Starbucks in-store transactions. Now, Juniper Research, a firm that analyzes the mobile market, is predicting that NFC sales will reach $50 billion in transactions worldwide by 2014.
Mobile payments aren’t just a new tech fad — they’re a product of our changing society where speed and information are king. Consumers have lost touch with their finances, and are now demanding control.
Having a mobile wallet is like carrying an entire bank and a personal financial coach in your back pocket, reinforcing positive behaviors, and steering you back on track when you veer off-course.
Your plastic cards? You might as well be talking to a brick wall.
Having 24/7 access to immediate, useful insights into your finances will help you bridge the gap between dollar figures, and your day-to-day life. Understanding this connection is the first step on your financial wellness journey.
2. It Encourages Bad Behavior
“My university roommate, Jen, got a line of credit to pay for school,” says Natalie.* “That money was supposed to be for tuition, books, and supplies. But whenever we would go shopping, she would take out her card and spend like a movie star, without even blinking! She thought of her line of credit as a well that was too big to run dry. She never looked at the balance, so she was blissfully unaware of her situation. Her monthly statements would send her into panicked tears. She tried to set goals, but they were hard to remember while browsing the racks. That’s the problem with being disconnected from your spending — you just don’t know enough to be smart.”
*names have been changed to protect privacy
Your plastic is powerless to correct unhealthy behaviors. It obediently dispenses money whenever you want, and remains voiceless when you shouldn’t be shelling out.
If Jen had paid using a mobile wallet, she would have gotten instant feedback after every purchase. This would have helped her make smarter decisions by reminding her of her goals, and showing her the steps she could take immediately to get back on track. Over time, Jen would build new habits and healthy behaviors would become her new normal.
Teresa Neal, an online faculty member from the University of Phoenix, explains that, even if we aren’t inclined to save, we can build those habits: “Learn. Enhance your financial knowledge. If one has developed savings habits and has learned how to spend and save wisely, those behavior patterns are more likely to be enduring.”
Knowledge is power. But knowledge on the go? That’s freedom.
Get Rid of Plastic and Go Mobile.
Three Things to Know:
1. Is it safe?
Absolutely! Mobile payments are equipped with all the security features of a card, along with added security elements that are unique to smartphones. Just like cards, mobile payments are password and PIN-protected, requiring you to authenticate yourself before making a purchase. However, the GPS capabilities of phones, as well as the ability to monitor your account activity anywhere and anytime, add an extra layer of security.
2. How does it work?
Mobile payments use NFC (near field communication) technology, which can be found in most phones, or in stickers placed on the back of your smartphone. These stickers transmit data via WiFi with an NFC-equipped terminal. (It’s kind of like an electronic swipe card for your building, except it allows two-way data sharing.) Another plus? It’s fast and fuss-free.
3. Where can I use it?
Within a couple of years, contactless payments will be pretty much standard. Already you can use a contactless card or your mobile phone to pay at places like Best Buy, Walmart, CVS, GAP, McDonalds, Walgreens, KFC, Starbucks, 7-Eleven, National Car Rental, AMC Movie Theatres, taxis in New York City and San Francisco, Nordstrom, and hundreds of thousands more locations.
Tell us: What would you do with mobile payments? Send money to a friend, buy a coffee, pay your rent?
photo credit: Metamorphula