5 Ways Credit Cards Could Be Messing Up Your Life

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Credit Cards and Your LifeNormally, when we think of credit cards, we think of convenience. While we might think that they can lead to debt if not used responsibly, many of us mostly see them a financial tool.

With credit cards, it’s possible to earn rewards, as well as easily make payments without the need to carry cash around. But are credit cards too convenient? And could their use actually cause more damage than good?

Here are 5 ways that credit cards could actually be leading to a worse quality of life:

1. You Spend More with Plastic

You are willing to spend more when you use a credit card. A study published in 2008 indicates that consumers are willing to spend more when they used credit, as opposed to use cash. Using a credit card puts off some of the “pain” associated with using cash. Cash creates a barrier to spending. Additionally, a study by Dun & Bradstreet quantified how much more consumers are willing to spend when they swipe the card. The damage? You are willing to spend 12% to 18% more with a credit card. Purchases are bigger, and you are willing to pay a higher price without negotiation when you are using credit.

2. Credit Cards Foster Impatience

Credit cards make it easier to receive instant gratification. Indeed, as a society we are becoming increasingly reluctant to wait for the things we want because a credit card makes it easy to get something now. Studies have long shown that consumers prefer instant gratification to waiting, and there are even indications that the most impatient among us have lower credit scores.

The more you use your credit card, the likelier you are to become impatient when you have to wait for something — whether it’s a purchase or whether it’s waiting in line at the DMV.

3. The Way You Spend with Credit Cards Can Make You Unhappy

On top of all of this, the way you spend with credit cards could be causing problems. One of the ways that money can buy happiness is when you spend it on others. However, many of us don’t use our credit cards to spend on others. Instead, credit card purchases are often made for convenience and instant gratification. As a result, you can end up in debt, paying high interest rates, for something that loses its charm within a few months. Almost all of the ways that studies say spending can make you happy are thwarted by the way we generally use credit cards.

4. The Wealth Gap is Growing Because of Credit Cards

Not only can credit cards mess up your life as an individual, but the widespread use of credit cards also contributes to the growing wealth gap. The middle class seems to be shrinking, and a study from the Federal Reserve Bank of Boston indicates that part of the problem is that credit cards allow low income and middle class families to spend more than they earn quite easily, creating a situation where they are downwardly mobile in terms of wealth.

5. Credit Cards Contribute to Unhealthy Behaviors

Believe it or not, but credit card use might be making you unhealthy. Think about whether or not you are eating healthy meals. If you’re not, and if your waistline is starting to show it, part of the problem could be credit cards. A recent study found that those who planned to pay with credit filled up their shopping carts with more unhealthy foods than those who planned to pay with cash. Using credit cards weakens impulse control, and that can lead to poor purchasing choices.

What do you think? Are credit cards doing more harm than good?

(Photo: David Scott)

{ 10 comments, please add your thoughts now! }

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10 Responses to “5 Ways Credit Cards Could Be Messing Up Your Life”

  1. Yes, I don’t use but one credit card for similar reasons…

  2. Jerry Mandel says:

    This is silly. Credit cards are “convenience cash”. We don’t carry around much cash and don’t go around writing checks. Also, with bonus air miles and hotel points, we can afford to travel……and give gifts of travel to family.

  3. admiral58 says:

    I spend everything on credit, and sometimes over spend, but always still pay everything off each month.

  4. Shafi says:

    I use credit card a lot, even for a gallon of milk ($2.99) at the corner store. There is nothing wrong with using credit card as long as you pay the bill in full every month and before the due date. When I know I won’t be able to pay the bill in full in a month, I just don’t buy extra. I only buy what I really need.

  5. Elizabeth says:

    I agree with this post except for the fourth point. Middle class wages have been shrinking for the past thirty years. Families have been using credit increasingly to covert the wage gap. credit card use is a result, not a cause, of this

  6. John says:

    On a related note to Shafi, I don’t understand the cultural phenomenon about not using credit card for small transactions like that… Is does it have something to do with keeping things from adding up on your balance maybe? I see it as superior because you avoid a ton of change and save a bunch of time making and dealing with said change.

    Anyone have any insight here?

    • dmosinee says:

      Businesses hate it, because the swipe fees (flat per-transaction fees) eat into their margins. I once had the owner of a Subway franchise (regular counter flunkies don’t care) publicly yell at me for using a credit card to pay for a $4 sandwich. I never went back after that, so I hope that’s the reaction he was looking for.

      I think the “cultural” aspect of it is probably 50% downward pressure from business owners due to the swipe fees I mentioned above, and 50% holdover from the old days when credit cards were rarer and were only used in situations where you actually wanted to finance a larger purchase over time (because they used to be LESS convenient than cash, and the rewards we enjoy these days didn’t exist).

  7. Jim says:

    Credit cards are great. It’s a free service for the user. All the ppl that yap about only using cash only have themselves to blame. Seriously whose fault is it that they can’t control how they spend just because they are paying with a credit card. There should be no difference between your spending habits btween cash or card. If there is maybe they should evaluate themselves.

    Sorry to piss some ppl off here, but if you are not using credit cards as a free service, than you are probably not good at managing your money or lack discipline.

    Paying with credit cards is greater than paying with cash if you know what you are doing.

  8. CrazyRcPilot says:

    I literally just mentioned this credit/cash spending difference today at lunch and I feel that the people leaving comments are right on the money, it boils down to spending control.

    I spent the last 6 months living in Brazil and dealing in cash certainly helped my daily spending, especially being on a “Per diem”. That being said though, I love my credit card rewards. I have not had an overdue balance once in the 8 years I’ve used credit cards and just this week I received a $90 Pole Saw for gardening, absolutely free.

    The “freebies” don’t come all the time, but its nice to get something extra for the money I’m going to be spending anyway, so long as its spent responsibility.

  9. Shirley says:

    While each of the five points mentioned may be true, the answer to ‘making money by using credit cards’ is self-control. Whether or not you come out ahead is your own choice.

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