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Cash versus debit card: the role of budget control

Lola Hernandez (), Nicole Jonker and Anneke Kosse

DNB Working Papers from Netherlands Central Bank, Research Department

Abstract: Due to the financial crisis, an increasing number of households face financial problems. This may lead to an increasing need for monitoring spending and budgets. We demonstrate that both cash and the debit card are perceived as helpful in this respect. We show that, on average, consumers responsible for the financial decision making within a household find the debit card more useful for monitoring their household finances than cash. Individuals differ in major respects, however. In particular, low earners and the liquidity-constrained prefer cash as a monitoring and budgeting tool. Finally, we present evidence that at an aggregated level, such preferences strongly affect consumer payment behaviour. We suggest that the substitution of cash by cards may slow down because of the financial crisis. Also, we show that cash still brings benefits that electronic alternatives have been unable to match. This suggests that inclusion of enhanced budgeting and monitoring features in electronic payment instruments may encourage consumers to use them more frequently.

Keywords: payment surveys; cash; debit card; consumer choice; budgeting; financial distress; self-control (search for similar items in EconPapers)
JEL-codes: C81 D12 D14 E41 G21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban, nep-cbe, nep-mac and nep-mkt
Date: 2014-07
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10) Track citations by RSS feed

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Journal Article: Cash versus Debit Card: The Role of Budget Control (2017) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:429

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