DescriptionFive studies examined the mechanisms by which large denomination bills reduce consumer willingness to make discretionary purchases. The first study demonstrated the denomination effect, in which large denomination bills can act as spending deterrents. Study 2 examined consumer perception of large denominations as an effective tool for monitoring spending and reducing discretionary consumption. Study 3 compared fungibility, processing fluency, and partitioning explanations for the effect, finding the strongest support for a partitioning based explanation. Study 4 provided additional evidence for the partitioning explanation, demonstrating that large denomination bills are as effective as envelopes in deterring spending. Study 5 demonstrated the effect in a real-world spending situation.