The use of credit cards stimulates the reward system of the brain and an urge to spend further, according to a recent study by MIT that examined the neuroscience of buying goods.
With credit card shopping, we need to ‘step on the gas’ and this will lead to more ‘urge to buy’ in the future, said Drazen Prelec, study author and professor at the MIT Sloan School of Management, in a release.
Previous research has shown that people tend to spend more when they pay with a credit card cash. For this new study, researchers used MRI machines to see what happens in the brain when people are asked to buy an item with cash or a credit card.
While inside the MRI, participants displayed various items on a screen, from video games to beauty products, which they could add to their shopping cart. They had the option to pay for the products with $ 50 cash or a credit card.
People were more willing to buy more expensive items with credit than cash and more generally spent on using a credit card, the authors of the study write.
When people bought things with a credit card, the MRI showed that a region of the brain’s reward system, called the striatum, was activated. The striatum is responsible for the release of dopamine, and is involved in reward, reinforcement, pleasure, and even addiction.
“The reward networks in the brain that are activated by all sorts of rewards are activated by a credit card purchase,” Prelec said.
Credit card directions, such as logos or buy-now buttons, essentially activate the pursuit of rewarding products, the study’s authors wrote.
Cash payment did not activate the reward networks.
So, what about credit cards?
To begin with, the reward network of the brain is ‘chronically sensitized by previous experience with credit cards’, the authors of the study wrote. In other words, ‘the act of putting that plastic credit card in your hand is related to pleasant purchases,’ Prelec said in the release.
Other studies have shown that paying for a credit card can ‘put costs out of mind’, the authors of the study wrote. Since you can defer credit card payments, it separates the purchase of your payment in your mind, and you do not have to spend the tangible and immediate sting of money, just like with cash.
It also matters if you pay with the credit card you use for necessities, versus one you use for things like travel and restaurants. Prelec said that neural activity depends on the card: “The card you use for restaurants and holidays creates a different appetite than the card you use to buy gas for your card,” he said.
As consumers adopt new payment systems, such as contactless payment, it is important for people to understand how neural reward mechanisms affect our spending habits, he said.
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