A result of the social distancing enforced upon us has almost everyone going out of their way to stay away from strangers, we have become more conscious of our health and personal hygiene. But are these changes here to stay?
Experts say, this we won’t know for some time, but an obvious effect of Covid-19 is our step further toward a cashless payment system. Correlating with the drop in consumer spending, credit bureau illion reported 32% less cash withdrawals from ATM’s since the pandemic hit and an increase in cashless payment options. Experts are predicting we will not go back to normal and that Covid-19 has entrenched a cashless economy upon us. The step away from cash payments is set to boost the ‘tap and go’ and ‘Buy Now Pay Later’ (BNPL) options, but consumers should be wary. Whilst seemingly a good idea now, these methods can cause problems down the track. Payment options like AfterPay and ZipPay are frowned upon by creditors and can have a negative affect on your credit rating.
This increase in contactless payment methods does leave experts wondering if the amount we spend will go up or down as a more ‘mindless’ approach is adopted. The physical handing over of money raises the awareness that we no longer have the money to spend and can have us thinking twice about big payments. Credit Card and BNPL transactions often leave us feeling like we have more money than we actually do as the amount we spend is broken down into instalments with interest.
Advice for moving forward is to stay on top of your spending habits and create a budget, as restrictions ease, we can expect the amount we are spending to increase. Try to avoid opting for the BNPL options, they are not beneficial for your financial health or credit rating.
By all means continue to carry cash for those smaller ticketed items like your Saturday coffee and the paper but stay on top of what your spending to make your return to normality as smooth as possible.