Even when we know that they can be dangerous to our finances, we still feel drawn to use our credit cards. In fact, in today’s fast paced, high tech world, it seems almost impossible to live without them. After all, you don’t want to be that person who holds up the line by paying with cash or a check.
It’s certainly true that credit cards are easy to use. You just swipe the card (or insert it), sign your name, and away you go. It’s simple, quick, and easy. However, that convenience may come at a price.
If you’ve ever struggled with credit card debt, you probably wondered how it happened. You don’t see how you could have run up that high of a balance. It certainly didn’t feel like you were overspending at the time. It was almost like there was something else influencing your behavior.
Utpal Dholakia Ph.D. recently wrote an article called “Does It Matter Whether You Pay with Cash or a Credit Card?” for Psychology Today.
In his article, he discusses some interesting behaviors that researchers have found about how consumers use credit cards.
The subtle psychological effects of using credit cards may get even more powerful as technology develops ever more seamless and painless ways to pay, like paying with your cell phone. The development of convenient payment methods is not a bad thing. Like most technology, it can be used for good or for bad.
The challenge is to understand how that convenience impacts your behavior and your related financial condition.
Remember that the credit card company (and vendors) makes more money the more that you use your card. They have financial incentive to make it as easy as possible for you to increase your use.
Before you pull out that credit card, or cell phone, just be aware of the subtle psychology of those credit cards and their impact on your personal finances.