BE DEBT FREE

Credit cards offer undeniable convenience, especially in an era where almost nobody carries cash – but credit card companies are masters at finding ways to subtly encourage excess spending.

Study after study has found that people chronically spend more when they use credit instead of cash – and they don’t even think about the expenses in the same way. Someone who has to plunk down cash on a big purchase will generally hesitate a lot longer and think about what they’re buying a lot harder than someone spending twice as much on credit. Here’s why:

Emotional spending and deferred consequences

Basically, it all comes down to the fact that credit card companies have managed to tap into consumer psychology and there are two very powerful factors in play:

• The rush of adrenaline or dopamine from spending: Credit card ads basically encourage consumers to “buy happiness” by tying positive emotions and happy life events in their ads to the use of credit. They play on the fear people have of missing out, and push them to seize the moment – even if that’s not particularly financially prudent.
• The delayed pain point that comes with a bill: All that purchased joy comes with a hefty price tag, but consumers don’t feel the pinch on their wallet until much later. By the time the bill arrives, most people already have a mental disconnect between those impulse buys and the financial drain.

Essentially, this creates a vicious financial cycle that can be almost impossible to break once you get in too deep. You can end up spending more on credit just because all your cash is going to the minimum payments every month – and that’s exactly where the credit card companies want to keep you.

When debts become overwhelming, it can negatively affect a lot more than just your wallet and your credit score. The stress can also damage your relationships, make it harder to focus on your job and harm your health. If you’ve had enough, it may be time to look into your debt relief options, including bankruptcy.