How did you make the payment for your shopping bills, lately? Credit Cards, right, as these are usually more convenient to use & carry than cash. Well, if used sensibly, credit cards can be an important financial instrument but only if used sensibly.
There are numerous psychological reasons which prove that use of credit cards can be hazardous for your financial health and one of the biggest issues is “overspending”, let’s understand:
Use of credit cards stimulates Overspending:
We tend to spend more while paying through credit cards than spending in cash, it also arouse desire which ultimately compels us to go beyond our means. With the power of credit cards and EMI culture, each one of us can buy helicopters also, sounds strange but it’s very simple. All you need to pay is Rs. 6667/- per month……for the next 200 years.
Now one may laugh at this but if you delve further, you will realize that the use of credit cards has literally removed the difference between “Buying” and “Affordability”. It has made us believe that we cannot only buy but we can afford each and everything that is available on this earth. This phenomenon has extended to all the products we buy like Mobile, Car, TV, Camera and even apparels!
Pleasure of buying v/s Pain of paying
Whenever and whatever you buy, there always will be a pain and that is called the pain of “paying” and specially paying in cash. Parting with cash causes great pain in spite of the pleasure of owning your desired object and what is a better way out than using a credit card to avoid this pain. The use of credit cards delays the payment and ultimately the pain of paying.
Benefits V/s Costs
You pay more attention to the benefits of a product while paying through credit cards and focus more on the costs associated with the product while paying in cash. Credit cards prompt you to purchase things you really don’t need and way beyond your budget, it makes you lose control over your spending. Retailers surely know these very well and use various tactics to stimulate your pleasure points and desperately want you to use your credit cards so that your focus shifts towards the benefits than cost.
What should you do!
Start spending in cash or use a debit card if at all using plastic money is a necessity, Debit card would bring more alertness than using credit cards as the money is coming from your bank account balance only. If using credit card is a must then be alert about the price of the product and other factors as discussed and set aside cash immediately; it would stop you from spending money you don’t have.
And always remember the fact that it doesn’t matter how much you earn if you spend it all!