Questão 3170253

TEXT

Read the text below and answer questions 28 and 29.

Why We're Spending So Much Money

[1] My credit card seldom leaves my wallet anymore. But that doesn't matter. In the two weeks before | wrote this story, | spent more than \$4,000 on my card without laying eves on it.

[2] Each of these transactions was made online, where my card number is stored by Uber or Walmart or Google Chrome. That's probably why | didn't feel embarrassed when | spent \$333 on groceries for a weekend with friends, or 848.34 on a pizza through Uber Eats, or even \$1,533 for an Airbnb. Without having to type in my card number, the pain of the purchase was softened.

[3] Frictionless transactions are common in today's economy — you can wave your cell near a cash register, press “buy” on Amazon without really knowing which credit card you're charging, and send money to a stranger via your phone without having met them in person.

[4] There are, of course, some reasons why people are spending a lot of money right now. But there's one additional factor that has changed since the beginning of the pandemic: people are more accustomed to using financial technology to pay for things, which eliminates barriers that might have once slowed their spending. "Convenience makes it much easier to enjoy the process of shopping, removing the additional difficulties of buying things,” says Yugian Xu, a professor at UNC's KenanFlagler Business School who has studied frictionless payment methods. Research shows that the more frictionless the payment method, the: more money people spend.

[5] Paying with a mobile phone is faster than using a credit card — it takes an average of 29 seconds versus 40, according to Xu, the UNC professor. That speed and convenience accelerates spending, Xu and her colleagues found in a July 2023 study that tracked spending after the launch of Alipay, a mobile payment service. It indicated that credit card transaction amounts increased by 9.4% once people could use a mobile device, while the frequency of transactions increased by 10,7%,

[6] The result is a cycle of tech adoption that has loosened customers" wallets. Once consumers started using mobile payments, they became more comfortable with making credit-card payments on their computers, and started moving more money digitally. And once they were comfortable spending money digitally, they started spending more money overall.

[7] Economists refer to the way people organize and spend their money as mental accounting. Humans are often irrational with the way they choose to spend and save money — splurging with a \$100 bill found on the sidewalk while saving every penny of their salary, for instance.

[8] Mental accounting is a big reason people spend more with frictionless payments. Consumers think of new apps like Apple Pay as a separate budget category that enables new spending, says Michael Gelman, a finance professor at the University of Delaware. In an experiment, Gelman tracked the behavior of consumers who had received a random credit card in the mail. While those consumers' spending behavior on their old credit cards remained the same, they started to splurge on their new one, dropping 26% more than people who had not received a new card. “Once you open a new budget category, you manage it separately," he says. “It can have an effect on total consumption: you consume more because you have the opportunity.”

[9] But many American consumers are spending beyond their means. Household debt reached a record \$17.5 trillion in the fourth quarter of 2023, and has increased by \$3.4 trillion since the end of 2019, according to data from the Federal Reserve Bank of New York. Credit card debt has “passed a milestone,” says Michele Raneri, head of U.S. research and consulting at TransUnion.

[10] That's partly because people have a hard time keeping track of all the places they're spending money, credit counselors say. The rise of digital payment systems like Apple Pay “creates this scattered universe of different payment options that can lead to overspending and financial instability.” says Bruce McClary, senior vice president at the National Foundation for Credit Counseling.

(Adapted from https:/time.com)

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