Trying to save money? Ask for crisp new bills at the bank

Nov 13, 2012

Consumers will spend more to get rid of worn bills because they evoke feelings of disgust but are more likely to hold on to crisp new currency, according to a new study in the Journal of Consumer Research.

"The of money can alter spending behavior. Consumers tend to infer that worn bills are used and contaminated, whereas crisp bills give them a sense of pride in owning bills that can be spent around others," write authors Fabrizio Di Muro (University of Winnipeg) and Theodore J. Noseworthy (University of Guelph).

Does the physical appearance of money matter more than we think? Money is said to be interchangeable. If we lend someone a $20 bill, it shouldn't matter if they pay us back with the same $20 bill or a different one. This is why diamonds, real estate, and art are not suitable as currency. But money may not be as interchangeable as consumers think.

In several studies, consumers were given either crisp or worn bills, and asked to complete a series of tasks related to shopping. Consumers tended to spend more with worn bills than with crisp bills. They were also more likely to break a worn larger bill than pay the exact amount in crisp lower denominations.

However, when consumers thought they were being socially monitored, they tended to spend crisp bills more than worn bills. When testing the well-known finding that people spend more when given the equivalent amount in lower denominations (four $5 bills) than when holding a large single denomination (a $20 bill), the authors found that the physical appearance of money can enhance, attenuate, or even reverse this effect.

"Money may be as much a vehicle for social utility as it is for economic utility. We tend to regard as a means to and not as a product itself, but money is actually subject to the same inferences and as the products it can buy," the authors conclude.

Explore further: Awarded a Pell Grant? Better double-check

More information: Fabrizio Di Muro and Theodore J. Noseworthy. "Money Isn't Everything, but It Helps If It Doesn't Look Used: How the Physical Appearance of Money Influences Spending." Journal of Consumer Research: April 2013.

add to favorites email to friend print save as pdf

Related Stories

Study: We really do like larger bills

Jan 31, 2006

A University of Iowa money study explores our preference for big bills over small ones -- and explains our marked reluctance to part with a larger bill.

Canada prepares to introduce plastic money

Apr 19, 2011

When I think of paying with plastic, I think of credit or debit cards. However, my thought process is going to have to change. Canada will soon join a growing list of countries that use a polymer-based plastic instead of ...

Recommended for you

Awarded a Pell Grant? Better double-check

18 hours ago

(AP)—Potentially tens of thousands of students awarded a Pell Grant or other need-based federal aid for the coming school year could find it taken away because of a mistake in filling out the form.

Perthites wanted for study on the Aussie lingo

Jul 23, 2014

We all know that Australians speak English differently from the way it's spoken in the UK or the US, and many of us are aware that Perth people have a slightly different version of the language from, say, Melbournians - but ...

User comments : 2

Adjust slider to filter visible comments by rank

Display comments: newest first

dschlink
not rated yet Nov 13, 2012
About the only difference I've ever noticed is new bills tend to stick together. Which can result in accidental overpayment.
tadchem
not rated yet Nov 13, 2012
Coins and bills are becoming obsolete. Even plastic is on the way out. My son and his generation are spending money using their personal digital devices, scanning QR codes with the built-in cameras, electronically debiting their accounts, crediting the sellers' accounts, and never even swipe a card.
The smallest unit of currency is now the bit.