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When you're choosing how you pay for a purchase, do you pick cash or credit based on how good it makes you feel? Maybe not consciously, but new research in the Journal of Consumer Research suggests that when you pay for something with a credit card, you generally focus on what you perceive the benefits to be, rather than the actual cost of them.

Professors Promothesh Chatterjee of the University of Kansas and Randall L. Rose of the University of South Carolina, authors of the study, conducted several experiments to see how people perceived a purchase when it was paid for by either cash or credit card.

"This project started when I was a doctoral student and surviving on credit-cards," says Chatterjee in an e-mail interview. "I would notice that even though I didn't particularly need a product but still would end up buying it. Intrigued by my purchase behavior, I reviewed the literature on credit cards if it would throw some light on it. I noticed that while 'credit card users spend more' was pretty well documented, no one had looked at how it influenced product perception. So [we] started the project, which yielded some interesting results. We found a differential attention to benefits versus costs for the credit card users. In addition, this was also a nice theoretical contribution to the literature and hence we chose to study credit card use in terms of benefits and not just costs."

Through a series of four experiments, the researchers tested how people perceived products if told they were using credit cards or cash to buy them. They divided the study participants into two groups, one that was primed on credit card concepts and one primed for cash concepts. Through a series of exercises, the researchers discovered that those who were primed with credit card concepts, tended to remember the positive benefits of a product. Those who were primed for cash concepts tended to focus on the cost of a product.

These studies build on previous research in the field that noted people's tendency to overspend when paying for purchases with a credit card, since they don't actually see the money leaving their wallets when they make a purchase. Chatterjee and Rose's study builds on that work by noting that the overspending may come about because people focus more on the positive aspects of what they're buying.

"However, our work also addresses a very fundamental question for consumer research by demonstrating that any factor that primes method of payment may alter consumers' evaluation of the products they are considering and even their choices among a set of products. Further, we are able to show that these effects can be obtained by priming concepts related to credit cards versus cash and that it is not necessary for a conscious decision to pay with credit or cash to have been made," say the researchers in the report.

This means that credit card users may wind up in debt much easier than they think because they're focusing on the what the product will do for them rather than whether or not they can afford it.

What does Chatterjee think of the results? "I think the most important aspect of the study is the fact that people are not necessarily aware of their own purchase behavior with credit cards. If educated about the fact that they tend to focus their attention on benefits more compared to costs, they would be less likely to fall into a debt trap and make irrelevant purchases. The bottom line is that while credit cards can be incredibly useful, once has to pay equal attention to costs as well as benefits."