If you’re trying to decide how to save money making your next purchase, one thing to consider is using cash instead of a credit card. That simple change could make a massive difference, even if you’re already wondering what the difference could possibly be. 

On one hand, they seem the same. You can get cash and make your purchase or you can put it on the card and use your cash to pay off the card at the end of the month. You’re spending the same amount of money, right? Well..maybe not.

The issue is that studies have confirmed that people tend to overspend on credit cards when they wouldn’t with cash. They’ll literally spend more money on the card for no other reason. This is true even for small purchases, such as spending $7 or $10 at McDonald’s. 

Why do they do it? It’s the distance between the reward and the loss that comes with spending money. When you pay in cash, you’re close to it. You have the money, and you have to physically hand it to someone else. When you swipe your card, you don’t feel the same sense of loss. You also know in the back of your mind that you don’t actually have to deal with it until the end of the month when you pay off the card, so you may be tempted to spend more than you can afford. With cash, you can’t. 

Overspending is one of the major reasons people run into overwhelming debt. As shown above, this often takes the form of credit card debt, and it can sneak up on you. If you find yourself in this position, it may be time to consider bankruptcy. Bankruptcy can help you get a fresh start and enable you to move forward with your goals.