My credit card is a mangled thing. Its blue plastic backing is peeling so much that it doesn’t work in swipe machines; it looks like a dog chewed it up and spat it out. It seldom leaves my wallet anymore. But that doesn’t matter. In the two weeks before I wrote this story, I spent more than $4,000 on my card without laying eyes on it. 

Each of these transactions was made online, where my card number is stored by Uber or Walmart or Google Chrome. That’s probably why I didn’t flinch when I spent $333 on groceries for a weekend with friends, or $48.34 on a pizza through Uber Eats, or even $1,533 for an Airbnb when my extended family comes to visit. Without having to type in my card number, the pain of the purchase was dampened.

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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. There’s even a company, McLear, marketing a ring that you can use to pay for things. 

These technologies, often referred to as “fintech,” for financial technology, make spending easier than ever before— and there’s growing evidence that they’re making us shell out more than we realize. With so many different accounts to keep track of and so many merchants smoothly debiting what we owe every month, we just keep on spending, whether we can afford it or not. 

U.S. consumers spent a record $19 trillion in December 2023, up 6% from a year prior and 29% from February 2020. Spending has soared despite high inflation, high interest rates, and repeated commentary from economists that this ebullience can’t continue. And yet it has.

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There are, of course, a few reasons why people are spending a lot of money right now. Consumers saved a lot of money when they were stuck at home during the pandemic, and now they’re making up for lost time by traveling, eating out, and doing all the things they couldn’t’ during quarantine. The government helped consumers feel flush by sending out stimulus checks and pausing student loan payments. After years of slow wage increases, workers’ payments are finally growing more quickly than prices, giving them extra pocket money.

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 Yuqian Xu, a professor at UNC’s Kenan-Flagler Business School who has studied frictionless payment methods. Research shows that the more frictionless the payment method, the more money people spend. 

By 2023, 73% of consumers had paid for something through a website or browser on a phone or computer, according to a McKinsey survey, up from 46% in 2019. People are also more comfortable using mobile payment apps like Apple Pay, Google Pay, PayPal, and Venmo; more than 53% of Americans surveyed by Forbes Advisor in 2023 said they used digital wallets more often than traditional payment methods. 

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%. 

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. 

Elizabeth Mendoza, a 33-year-old who lives in Washington state, says she was getting her debt under control before the pandemic by setting aside cash twice a month for various budget categories like groceries, gas, or her cat. She found that she spent less using cash, because she would think twice about parting with a large bill. 

But once COVID-19 hit, Mendoza got into the habit of buying things online and saving her credit card information in different apps. Soon, she found herself back in about $20,000 worth of debt. “Once I stopped using my cash,” she says, “I stopped paying attention to what I was doing.”

In October 2023, Mendoza vowed to get out of debt and removed her credit card from any app that would save it, including Apple Pay. She creates colorful envelopes every month to put her cash in to make the process more fun. It’s more of a hassle to buy things online now since she has to go find her wallet and type in her information. But she says it’s made a huge difference in her spending. “It’s just so easy to fall into using your credit card and not keep track of what’s going on,” she says. 

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 fastidiously saving every penny of their salary, for instance, or spending more money on the same item if they’re paying via credit card than if using cash.

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Mental accounting is a big reason people spend more with frictionless payments. Consumers think of new apps like Buy Now Pay Later or 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.” 

Yanibel Colon, a 35-year old account manager who lives in the Bronx, was once the type of person who would buy things with cash and use her credit cards for emergencies. But cooped up at home during the pandemic, she started putting more things on her credit card, and using Buy Now Pay Later services. She mentally categorized Buy Now Pay Later spending as cash, which got her into trouble. “I was like, ‘Well, it’s not a credit card, I don’t have payments,” she says. Now, she sets a budget every month for certain categories like food, and makes sure she doesn’t exceed them, no matter how she is paying. 

Strong consumer spending has helped stimulate the economy and provided healthy profits for companies that depend on the American consumer. Walmart, for instance, saw online sales grow 17% in the last quarter, and made about $1.2 million a minute in 2023. Amazon reported its highest operating profit in history in its February earnings report. 

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, VP and head of U.S. research and consulting at TransUnion. Credit card balances now stand at $1.05 trillion, 13% higher than a year ago. The percent of credit card balances that are 90 days or more delinquent ticked up in the last quarter of 2023, according to the New York Fed, reaching nearly 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 and Buy Now Pay Later  “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 (NFCC), the largest nonprofit financial counseling organization in the U.S. 

“People ask me, ‘How could you let this happen,’” says Britt Reynolds, 28, who uses TikTok to chronicle her journey getting out of $36,000 of debt. “I want to say, ‘Credit card companies gave me a $43,000 credit line, and spending money is the easiest thing in the world.’”  

Tanya Menendez, the co-founder and CEO of Snowball Wealth, a financial tracking and education app, says she frequently sees clients who have lost track of their spending because of the many ways they can pay for things. She recently held a workshop for clients and asked them to estimate how much they spent every month on ride-share apps like Uber. They’d estimate they spent $400, she says, only to find that they spent double that on average. 

Many of the apps that helped people track their spending have disappeared in recent years. Mint, the personal finance app, will be shutting down on March 23, according to Intuit, the company that owns it. There aren’t many good free options left. “Tracking your spending is really difficult,” Menendez says. “It’s like a vitamin that people aren’t taking.”

Credit counselors have a variety of tips to help combat overspending on frictionless transactions. Jessica Spangler, a money educator whose book, Invest Like a Girl, comes out March 26, recommends not storing payment information in apps. She also tells people to set up their phones so that they get a notification every time they make a purchase, no matter what payment method they use. “That way you’re not just swiping into the void,” Spangler says.

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McClary, of NFCC, recommends having only a few accounts where you spend money so you can more easily track them. It’s easy, he says, to set up new accounts through Google Pay, for example, and then forget which credit card it’s linked to, which makes it harder to calculate whether you’re overspending. And those mobile accounts aren’t doing you any favors—the more time you have to think before you make a purchase, he says, the more likely you’ll evaluate whether you can afford it.

As for me, I’ve started putting reminders on my calendar to check my credit card balances so that I can track how my spending on apps is piling up. Not that it’s easy. Digital payments are swift but the process of logging into my account to track them is a headache that involves remembering bank passwords and logins and then waiting for the bank to send me a code to verify my identity. If spending money was as hard as tracking it, we might not do so much of it.

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