Psychology Behind The Use Of Credit Cards

Credit cards are frequently being used to meet those of our demands which can't be realized by our monthly budget. The psychology behind the use of credit cards is the frenzy to get hold of the desired products and services. Even discreet people use their credit cards indiscriminately. The result: we end up with unnecessary debt.

Credit cards are a veritable fire that burns if not used properly, substantiated by the average credit card debt in the US of $6000. This is more than 10% of the average gross income of the country. This leads people to thousands of dollars in interest payments, boosting up the bottom lines of banks needlessly. Unfortunately, most people fail to realize high cost of carrying a credit cards debt.

Urge To Splurge 

Basically, in this materially-driven world, it is the urge to splurge that drives regular people crazy with their credit cards, buying things you don't need. Many credit card holders justify their urge to splurge with the blunt reply: "I deserve this."/span> 

Usually, people flash credit cards to lead a certain lifestyle. When the cards run out, so does the lifestyle. If you lead a life on borrowed money, it's going to gobble you up. 

Financial illiteracy is the reason behind unscrupulous credit card use. Many people don't know how much they earn monthly and don't have budget to meet their needs. They simply don't understand the increasing interest charges they have to cough up against each purchase with credit cards. Maximum they can see only $40 a month or $25.What they don't do is to look at their overall indebtedness. The don't see that a hefty 18% annual interest rate doubles in four years. 

Time To Get Out Of Debt 

Credit cards are useful in certain circumstance, such as vacations, and keep you out of some unforeseen expenses. However, it is high time to get out of the debt trap of credit cards. Limit the number of credit cards by deciding how many cards you actually need. 

If you own credit cards, you should keep those credit cards with high APRs to a minimum balance, as these cards will charge you hefty interest rates. To get out of the debt trap, decide how much of your debt you can pay off immediately. If you're in severe debt trap, you won't be able to get out swiftly unless the substantial repayments are done on a regular basis. Suppose you think that you'd be comfortable repaying $500 every month, try to repay $600 or even $700. 

Keep in mind that having money or lack of it has never been a parameter to judge or evaluate your true personality. Your value as a person has nothing to do with your money. Once you get out of such narrow meaning and start believing that money is no longer related to your sense of self-worth, you will successfully pass the psychological barriers of using credit cards, which kept you from astutely managing money and making a lot more.