Do you ever get to the end of the month and find yourself shocked by the credit card statement? You knew you were using your credit card all month, of course, but you just didn’t realize exactly how much you spent. You can’t believe that you made so many purchases.
If you have felt like this, you’re not alone. Overspending is something that credit cards tend to promote. Studies have looked at how much people will spend when they pay in cash versus how much they spend with credit cards, and there’s a clear correlation. Spending levels always seem to increase slightly when people are using cards.
Why does this happen?
This happens for a few reasons, one of which is just convenience. Someone may not have had any cash on hand, but they were carrying their credit card. If they had needed cash, they simply wouldn’t have made the purchase at all, but the card makes it easy to buy what you want and pay for it later.
Speaking of paying for it later, credit cards also make you feel as if the money isn’t real. You’re not spending anything. If you had to take a withdrawal of $200 out of your bank account, you would see the balance drop. But you can charge something on the credit card without even looking at how much higher the balance goes, and you can tell yourself that you’ll just worry about it later. By the end of the month, you’re sure you’ll find a way to cover those costs.
This level of disconnect is something of a psychological trick that can make you spend more than you can afford. If this happens to you, you may need to look into your options to use bankruptcy or other legal tools.