Using credit cards is often seen as something that is just convenient. It’s easy to carry a card around and have access to a line of credit that can buy anything that you need, but you don’t have to bring cash with you everywhere that you go. This is also seen as a lot safer because if you lose a credit card, you can just cancel it. Losing cash means it is lost forever.
But what people sometimes don’t realize is that using the credit card is actually costing them a lot more in cash in the long run. Here’s how it happens.
The mental disconnect
The problem is that using a credit card creates a level of disconnect between the spending that is taking place and the actual amount of money that is being spent. Psychologically speaking, someone who is using a card does not feel like they are spending money in the same way that someone feels when they use cash. One study found that users would typically spend around 18% more money if they were using a credit card to do it.
Think of putting a $100 charge on a credit card. Many people have done this in a heartbeat. But if you actually had to take a $100 bill out of an ATM and hand it to someone, would you think twice about that purchase? The credit card makes you feel like the money isn’t real, but the debt that it creates is definitely going to cost you.
If you do find yourself facing overwhelming debt and high credit card interest rates, take the time to look into bankruptcy and all of your other legal options.
