MIT study: Paying with credit cards activates your brain to create 'purchase cravings' for more spending

Using credit cards stimulates the brain's reward system and an urge for further spending, according to a recent study from MIT that examined the neuroscience of buying things.

Credit card shopping tells us to "step on the gas" and leads to more "purchase cravings" in the future, Drazen Prelec, study author and professor at the MIT Sloan School of Management, said in a release.

Previous research has shown that people tend to spend more when paying with a credit card versus cash. For this new study, researchers used MRI machines to see what's happening in the brain when people are prompted to buy an item with cash or a credit card.

While inside the MRI, participants were shown various items on a screen, from video games to beauty products, that 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 spent more overall when using a credit card, the study authors wrote.

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 releasing dopamine, and is involved in reward, reinforcement, pleasure and even addiction.

"The reward networks in the brain that are activated by all kinds of rewards are activated by a credit card purchase," Prelec said.

Credit card "cues," like logos or buy-now buttons, essentially "activate the pursuit of rewarding products," the study authors wrote.

Paying in cash did not activate the reward networks.

So, what is it about credit cards?

For starters, the brain's reward network "has been chronically sensitized by prior experience with credit cards," the study authors wrote. In other words, "the act of putting that plastic credit card in your hand is associated with enjoyable purchases," Prelec said in the release.

Other studies have shown that paying with a credit card "may put costs out of mind," the study authors wrote. Since you can postpone credit card payments, it separates purchase from payment in your mind, and you don't have to experience the tangible and immediate sting of spending money, like you do with cash.

It also matters whether you're paying with the credit card you use for essentials, versus one you use for things like like travel and restaurants. Prelec said that the neural activity changes depending upon the card: "The card you use for restaurants and vacations creates a different appetite for spending than the card you use to buy gas for your card," he said.

As consumers adopt new payment systems, such as contactless payment, it's important that people understand how the neural reward mechanisms at play influence our spending habits, he said.

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