Expert warns UK Christmas market visitors, as cash-free stalls push up festive spending

In light of research revealing that shoppers consistently spend more when using contactless or card payments, an expert has reminded Christmas marketgoers to be mindful of the way they spend when joining in with the festivities this year.

Joe Lytwyn, personal finance expert at thimbl, says the shift towards cash-free markets in the UK could encourage unconscious overspending at a time when many household budgets are already under pressure.

"There are pros and cons for all payment methods. For big-ticket items like travel, electronics, or furniture, a credit card offers valuable protection on eligible purchases through Section 75. Christmas markets are a completely different environment, however. They’re emotional, fast-paced, and full of temptation to make small, impulse purchases - and that’s where cash could work in your favour. With cash, you can see exactly what you’re spending, feel the money leaving your wallet, and are far less likely to get carried away. A debit or credit card is useful for security, but cash could be a great tool for controlling your budget in the moment."

A study published in the Journal of Economic Behaviour & Organisation found clear evidence that consumer spending is consistently higher when paying with cashless methods than when using cash. The researchers say it reduces the ‘pain of paying’ when making card or contactless payments, which lowers the psychological friction that normally helps keep spending in check. The results found that the ease and speed of cashless transactions make it easier for shoppers to lose awareness of how much they’re spending and slip into making unintended purchases.

Joe warns that many UK Christmas markets are moving towards a fully cashless model, while, in contrast, many European Christmas markets still rely heavily on cash. Travel guides note that Germany is still a “cash-first” country, with many small stallholders refusing cards entirely. Prague’s official visitor site confirms that “most stallholders prefer payment in cash” and only a limited number accept mobile or card payments.

Mug deposit refunds and public toilet fees are typically cash-only and are just two examples of the potential hidden costs of European Christmas markets. Mug deposits, used widely in Germany, Austria, and parts of Central Europe, require consumers to pay a refundable charge of around three to five euros every time they buy a drink. For families buying multiple mulled wines and hot chocolates, this can add 20 to 30 euros before the cost of the drink itself. Tourists also risk foreign transaction fees when using cards abroad, or poor exchange rates when withdrawing cash at airport ATMs.

"In Europe, you may need cash for deposits and small purchases, but in the UK, you might find that you spend more if you rely on contactless," Joe says. "Understanding the difference and your own financial habits is key. If you recognise that you tend to impulse buy when using card and contactless payments, you might consider switching to cash when visiting a UK Christmas market this year."

Joe’s tips for staying in control at Christmas markets include:

• Consider carrying cash if visiting European markets, as many stalls are cash-only or have minimum card spending limits.
• Avoid airport ATMs, which often have poor exchange rates and high fees. Use a fee-free card if you need to withdraw money abroad.
• Return mugs at the end of the visit to reclaim deposits. This could save you a good amount of money.
• Consider using cash even where contactless is available. Behavioral research consistently shows people spend less when using physical money.
• Set a clear per-person budget for food, drink, and souvenirs. Keeping cash separate from everyday cards helps avoid overspending.
• Check if the market is cashless before arriving.

Joe says Christmas markets are an enjoyable festive activity we shouldn’t have to miss out on, but a few small changes could make the experience more affordable.

"Christmas markets are special, but they’re full of subtle spending traps," Joe adds. "If you pay in cash, you put a psychological speed bump between you and your money. It’s a tiny change that could have a big impact by January."