Credit cards can trick you into additional spending

Credit cards are beneficial in several ways. They make online shopping easier, for instance, which is important in the modern world. They also may offer rewards, such as airline miles or cash back, that you may want to take advantage of. Plus, credit cards give you access to funds when you do not have cash on hand.

But there are also some downsides to using these financial resources. Credit cards can make it easier for you to overspend or accumulate additional debt. There are several reasons why this can happen. While not everyone falls into this trap, it’s important to be aware of the psychological and behavioral factors that can lead to overspending when using credit cards.

Psychological distance

Paying with a physical credit card can create psychological distance from the money being spent. Studies have shown that people generally spend more money when using a credit card than they would if they were paying in cash because the transaction feels less real. Someone may not think twice when charging $100 on a card, for instance, when they wouldn’t have made the purchase at all if they had to physically hand over a $100 bill.

Deferred payment

Credit cards allow you to postpone payment for purchases until the end of the billing cycle. This delay can create a disconnect between the act of spending and the consequences of spending, making it easier to overspend in the short term. When you want to make an impulse buy, for instance, you may be more likely to put the charge on a credit card and tell yourself that you will “figure it out” in the future.

How debt can spiral

If you start overspending, credit card debt can spiral out of control. After all, credit card statements typically include a “minimum payment” option, which can give the illusion that you only need to pay a small amount each month. But, if that’s all you pay, a heavy interest charge is added – which could be more than the minimum payment. This could cause you to carry a balance and accumulate excessive interest charges, making your transactions more expensive in the long run.

What options do you have?

If you find yourself struggling with credit card debt, the good news is that you do have options. One may be declaring bankruptcy to eliminate debt, followed by building your credit rating back up. You can seek legal guidance at any time to explore the ins and outs of this opportunity.

Attorney Brad Hawley

Attorney Brad Hawley possesses years of practical experience focused on bankruptcy, civil and criminal defense. He has prosecuted and defended clients in state court, and is a former enlisted member of the United States Army. Brad is driven by his desire to help people that have been hurt by the legal system, and is dedicated to fixing injustices he sees around him. [ Attorney Bio ]