Paying with credit cards has effects on your brain

Checking Credit Card

Have you ever thought about the effects paying with credit cards can have on your brain? Probably not and it’s a real shame because the topic is fascinating!

According to a recent study conducted by the MIT, constantly using credit cards can stimulate the brain’s so-called reward system, but also trigger an urge for further spending. Basically, credit card shopping sends a “step on the gas”-like message to the brain, which leads to more future “purchase cravings”, claims Drazen Prelec, study author and professor at the MIT Sloan School of Management.

Credit cards make you spend more

Previous studies have revealed that when paying with a credit card instead of cash, people tend to spend more. As for the current study from MIT, it analyzed MRI scanner results and it turns out that buying things with a credit card triggers an area located in the brain’s reward system, called the striatum, responsible for releasing dopamine and involved in pleasure and reward, but also reinforcement and addiction.

“The reward networks in the brain that are activated by all kinds of rewards are activated by a credit card purchase,” Prelec said.

The idea is simple: logos or buy-now buttons can activate the “pursuit of rewarding products”. On the other hand, paying in cash doesn’t have the same effect on the brain.

What makes credit cards so special?

Multiple studies have revealed that paying with credit cards “may put costs out of mind”. So, considering that you just cannot postpone credit card payments, this has the power to separate purchase from payment deep in your mind, so you don’t experience the feeling of spending money immediately, like when you are paying with cash.

Another aspect that needs to be mentioned is that it matters very much whether you’re paying with a credit card for essentials and not for traveling or restaurants. Drazen Prelev says that your brain’s activity changes depending upon the card you are using.

To wrap it up, it’s very important for people to understand how the neural rewards mechanisms can influence our spending habits and the other ways they can impact our brain.

Credit card statements