Most people use credit cards to pay for their purchases. While you may think this is a good thing, in fact it bad because it makes you spend more. This article shows you why credit cards are bad and how they influence your purchasing behavior. If you don’t believe it, you can monitor your expenses to see it for yourself. Try to use only cash for one month and compare it with one of the months when you’ve used your credit cards for the most part of your time. You’ll see the difference right away, we promise you that!
When you use your credit card to pay for your purchases, you don’t have the feeling that you spend a lot of money. Having a pile of cash in your pocket and using it to pay feels totally different. The simple sight of all that money makes you think twice before spending it on things that you may not really need. Psychologists have undergone in-depth research that leads to this conclusion. Most subjects of these studies have shown different shopping behaviors when using different methods to pay for their purchases. Apparently, credit cards are the worst, because they seem to make us spend a lot more than we can afford. Sometimes, people don’t even realize how much they are overspending because of this habit of our modern society.
Fighting our human nature is a hard thing to do, so we need various strategies to fool our brains into helping us become better in our lives. Paying with cash is one of these strategies. Using mainly cash has other benefits, as we are going to see in a moment.
Some people feel good when they pay with credit cards, because they are happy to spend money they don’t actually have. When you use your credit card, you spend money that belongs to the bank. If you can pay it back before it starts bearing an interest, you’ll be just fine. At least, this is the kind of reasoning of most people. However, this logic is flawed. Indeed, you don’t spend your own money, so you can make some purchases before your next paycheck, without having to pay any interest. Nonetheless, this fact may put you in a crazy shopping mood that will make you buy more than you can actually afford. Overspending is very easy when you don’t use your own cash to pay for stuff. Even though you may have the firm intention to repay everything in due time, real life situations prove that most people fail at it. Once you’ve failed to do it, the next month you’re going to be in a bigger trouble, as you’ll keep on spending money you don’t have. By the end of one year of doing this, chances are you’re never going to settle your credit card balance, so you’ll keep paying interest with each and every month that passes.
When you pay with cash, there’s no way you can spend money you don’t have. Like this, you’ll have to limit your purchases to fit within your monthly budget. It may seem like a hard thing to do, but all you need is to form a habit of postponing various non-urgent expenses until you can actually afford them. This habit may even enable you to start saving money, in order to create an emergency fund. By using this fund instead of your credit card, you’ll see your financial situation improving. Although you may think that a credit card is the best emergency backup, you should be aware of the fact that an unexpected expense may easily shatter your family finances. It’s easy to take that piece of plastic out of your wallet and sort out your emergency. However, it isn’t as easy to put that money back. In fact, most people never manage to restore the balance, thus ending up in even bigger debt than before. Besides, using credit cards chaotically may affect your credit score. This is going to be come a very big problem, should you ever need to apply for a bank loan.
All these being said, you should change your habit of using credit cards. Even if you won’t be able to make the full switch right away, you’ll see an improvement of your financial situation. Take baby steps, but be consistent. The day will come when you’ll be thankful for the results.