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Shift to cashless society causes three in five Brits to overspend

Research suggests people need to adjust how they deal with money in the digital age to stay in control of their finances

Almost three in five (59%) British consumers say that not having to hand over physical cash has led to them spending more at the tills, our researchhas found. 72% say digital payment methods such as Apple Pay and contactless credit cards have encouraged them to make more impulse purchases, suggesting a need for more people to consciously embrace new ways to keep track of their money.

The sound of money

To encourage people to think about how technology is transforming our relationship with money, we commissioned a piece of music that shows how the sound of money has evolved over the last hundred years. The piece was composed by Finbar Wheelman, a composer and artist based in Edinburgh. It follows the history of money starting with coins and cash registers and ending with the blip of Apple Pay. You can listen to the clip here

Ease of digital spending causes us to lose track

Although we welcome the digitisation of money, it does make it more abstract. Two out of five (40%) shoppers admit that the ease of digital payment methods has caused them to lose track of their spending, with almost one quarter (24%) having missed a bill and 15% having defaulted on a loan, damaging their credit score as a result. More than half (57%) had to cut back on their monthly spending and one in ten (10%) turned to a pay day lender. Millennials (18-34 year olds) are more than twice as likely to use mobile payments than older generations2, yet are also 20% more likely to overspend.

Move towards a cashless society

Technology has completely transformed the way we shop. In the UK, more than half (52%) of consumer purchases are made without hard cash3. This trend towards a ‘cashless society’ has been embraced by shoppers, particularly the young, with 61% of consumers agreeing that the freedom and convenience of payments technology is a positive thing. This rises to 89% among millennials.

Technology can also help us keep track of our finances

Justin Basini, our CEO, says: “Without the feeling of handing over cash – the clink of coins and the rustle of bank notes – money becomes even more abstract. We can easily lose track of how much we’re spending. It means its even more important than ever to stay on top of your financial information by checking your bank balance and debt levels regularly and nurturing your credit score.”

While technology makes it easier for people to spend, it also makes it easier for them to manage their financial information, using apps such as ClearScore to access their credit score and report. 64% of consumers agree that online services and apps make it easier for them to track and stay on top of their money.

Justin continues: “We’ve only just begun to see how technology might transform the way we all interact with our money. I think the majority of that change is going to be very positive, giving us back control over our financial information and pushing companies to offer better products and services.”

To help you stay on top of your financial information, we’ve built our free Timeline tool, available in your ClearScore account. This allows you to track your debt levels and credit score over time.

 

1Based on responses of 2041 adults (aged 18 years and above) conducted by Censuswide over period 02.09.16 – 06.09.16.

2Source: Hanover Research: https://www.digitaldoughnut.com/articles/2016/june/retail-for-millennials

3Source: Mastercard and Advisers/McKinsey: http://raconteur.net/technology/the-decline-of-cash

 

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