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Contactless cards might be dangerous for your finances

Categories : Cash facilitates budgetary control, Cash is efficient
January 24, 2017
Tags : Budget control, Card payments, Cash substitution, Europe, United Kingdom
Contactless might be user-friendly and a great time-saver, but British consumers are starting to see their money disappear into thin air: not very helpful when 4 in 10 adults own less than 500£ in savings.
Communication Team / Equipo de Comunicación

The introduction of contactless cards has been met with great success. Indeed, customers have rapidly adopted this user-friendly, time-saving payment method. Nevertheless, different studies based on the spending behaviours of British consumers show that people tend to spend more money when using contactless cards than other payment instruments.

Cardholders’ monthly spending has increased by about 20% since the spending limit per contactless transaction was raised from 20£ to 30£ in the UK. Reports suggest that this rise is mainly due to recreational expenditures. During happy hour at a bar, for example, contactless card users no longer look at the payable amount before tapping their card on the reader. The spending limit was precisely introduced to avoid the risks of financial ruin, but figures demonstrate that 50% of contactless cards in the UK are credit cards, while 4 in 10 adults own less than 500£ in savings, according to the Money Advice Service.

Contactless cards might be more convenient than traditional payment methods but they create a significant risk of overspending as their users are often unaware of the exact amounts already spent. It is consumers’ responsibility to keep their finances in check, but having tools that make spending more tangible, like a handful of banknotes, can go a long way for financial stability.

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