05/26/2015 07:56 pm ET Updated May 26, 2016

Apple Pay: Making It Work for YOU

Dear Carrie,

My 20-something son is all for using Apple Pay for his purchases. While I'm no technophobe, these types of easy payment systems make me nervous. Am I just being old fashioned?

-- A Reader

Dear Reader,

Thanks for giving me a chance to weigh in on a topic that is understandably on a lot of people's minds right now. There's been a great deal of talk about Apple Pay as well as other payment methods, such as Google Wallet and PayPal, and how these systems are changing the way we pay for our purchases.

Like you, I find the technology intriguing, and I'm all for ease and convenience. That said, I do have some concerns, not around the system itself, but around how it affects people's control -- or lack of control -- over their spending.

But let's start by looking at the benefits.

Ease of use is a plus
According to recent press, it appears that Apple Pay is ahead of the pack in terms of digital payment methods. It's easy to set up on your iPhone 6 or Apple Watch, it doesn't require a special app or a separate account, and it's free.

And it couldn't be easier to use. Once it's set up, your mobile device carries a digital version of your credit and debit cards plus your fingerprint. When you put your device near what's called a Near Field Communication payment terminal, an image of your credit or debit card appears. Rather than the old-fashioned method of swiping your card, you simply touch the Home button thumbprint and Apple Pay communicates with your bank.

It's more secure than carrying multiple cards
While a lot of folks may initially worry about security, Apple Pay may actually be a far more secure method of payment because you never physically hand your card to someone else. Just think -- no one sees your card, your number, your security code or even your name. Plus, each communication with your bank triggers a unique number for that specific transaction which isn't stored on your phone.

Losing your phone is another worry. But there's a Find Your Phone app to suspend or permanently remove the ability to pay from the lost device. Alternatively you can contact your bank to suspend the service. To understand more about Apple Pay's security measures, contact your bank or go to for the latest information.

But Apple Pay isn't just about technology; it's about spending your money. And that's where I'd counsel a bit of caution.

Tech aside, you're still stuck with the bill
No matter how easy it is to pay for something, we're still talking about credit and debt. And it's pretty well known (and well documented by behavioral economists) that people tend to spend more when using credit than when paying with cash.

Credit cards remove us one step from the awareness of what we're actually spending. Signing your name to a $100 charge doesn't carry the weight of handing over $100 in cash. So my concern is, if we don't even have to take out the card and can just pay with a single touch, are we even farther away from understanding just how much we're spending?

One way to help avoid going overboard on credit card spending is to link Apple Pay to a debit card in addition to or instead of your credit card accounts. Although it's not the same as paying with cash, knowing you're depleting a cash account can help prevent running up an over-sized credit card balance.

In other words, no matter how compelling the technology, I believe there's a bit of old-fashioned money management wisdom that needs to hover nearby. Because, while we're making it easier than ever to run up debt, it remains just as hard to pay it off if you're not mindful of your spending. Using a payment method like Apple Pay can feel like a game, but the rules of budgeting, the difficulty of living within one's means, and the importance of saving mustn't get lost in the fun.

I suggest having a few more conversations with your son. Get onboard with the technology. Learn what you can from him. But in return, share some of your own financial experience.

Make certain that he understands the need to control spending and debt, how interest can add up, how misuse can impact your credit rating and how this can affect your future ability to borrow. Encourage him to set goals and begin saving for retirement.

Past technological advancements from bank debit cards to online investing have helped us simplify and take greater control of our time and our finances. I believe that digital payment systems like Apple Pay can do the same -- as long as we realize that it's not just the technology that's important, but how we use it. And using it wisely is the key.

Looking for answers to your retirement questions? Check out Carrie's new book, "The Charles Schwab Guide to Finances After Fifty: Answers to Your Most Important Money Questions."

This article originally appeared on can e-mail Carrie at, or click here for additional Ask Carrie columns. This column is no substitute for an individualized recommendation, tax, legal or personalized investment advice. Where specific advice is necessary or appropriate, consult with a qualified tax advisor, CPA, financial planner or investment manager.


Biggest Money Mistakes 20-Somethings Make