topic Re: Using Credit Cards Encourages Extra Spending 💳 in Community Chat

Using Credit Cards Encourages Extra Spending 💳

handygal2 — Sat, 01 Apr 2017 11:46:55 GMT

Research has shown that people will spend more if they're using a credit card rather than cash. This means BUYING more items, as well as PAYING more for those items. It's especially true when consumers use "rewards points" cards.

Several studies have been done, showing the psychological effect when using a credit card. In one case, an auction was held for baseball and basketball tickets. Participants were willing to spend TWICE as much when they were allowed to use credit cards, as opposed to cash only.

Here's the link to a brief, interesting article:

https://www.nytimes.com/2016/03/27/your-money/credit-cards-encourages-extra-spending-as-the-cash-habit-fades-away.html?smid=nytcore-ipad-share&smprod=nytcore-ipad

Re: Using Credit Cards Encourages Extra Spending 💳

software — Sat, 01 Apr 2017 11:55:43 GMT

The credit card companies know it and hope you do.

@handygal2

Re: Using Credit Cards Encourages Extra Spending 💳

Mominohio — Sat, 01 Apr 2017 12:21:27 GMT

Thanks for posting this.

It has always been a no brainer to me. I see it and experience it often.

I have gone to spending cash only whenever possible, as it does make much more of an impact on me, just how much I'm really spending.

Re: Using Credit Cards Encourages Extra Spending 💳

dex — Sat, 01 Apr 2017 12:43:20 GMT

If I needed to pay cash I wouldn't ever purchase much.I usually have only five dollars in my wallet.I like using the card so I can see what I have purchased,get the rewards and pay in full each month.

Re: Using Credit Cards Encourages Extra Spending 💳

Mint2 — Sat, 01 Apr 2017 12:59:36 GMT

We put everything we can on our card including utilities, phone and insurance. I know this is true for some people but we have been doing this for years and have never not paid it off at the end of the month. You have to be disciplined to do this though. Some people I know can't do this but it works for us.

Mint

Re: Using Credit Cards Encourages Extra Spending 💳

Mominohio — Sat, 01 Apr 2017 13:02:18 GMT

The last paragraph of this article in insane and one reason so many of us carry so much debt....buying into this cr@p

“Credit cards are useful because people want to be thrifty with time,” Mr. Calder explained. “In the 20th century, time became scarce and credit cards and credit in general helps with that. It’s one thing to save and save and buy an engagement ring for someone you love, but not if you wait and she runs off with someone else.”

Re: Using Credit Cards Encourages Extra Spending 💳

brandiwine — Sat, 01 Apr 2017 13:41:32 GMT

Like anything else, you have to have a little self control. That's like blaming the grocery store because they have ice cream and I ate the entire container.

Re: Using Credit Cards Encourages Extra Spending 💳

gidgetgh — Sat, 01 Apr 2017 13:44:11 GMT

That's how I also feel about Easy Pay.

Re: Using Credit Cards Encourages Extra Spending 💳

reiki604 — Sat, 01 Apr 2017 13:45:05 GMT

@Mint2 wrote:
We put everything we can on our card including utilities, phone and insurance. I know this is true for some people but we have been doing this for years and have never not paid it off at the end of the month. You have to be disciplined to do this though. Some people I know can't do this but it works for us.

Mint

I'm with you! I have one points card solely devoted to paying my mortgage, health insurance and utilities every month. Then I have the bank automatically pay off the card each month. Lots of points, no debt.

Re: Using Credit Cards Encourages Extra Spending 💳

esmeraldagooch — Sat, 01 Apr 2017 13:49:10 GMT

It's why fast food joints started letting people use CC at their stores. Most won't just charge a glass of pop...

Re: Using Credit Cards Encourages Extra Spending 💳

Carmie — Sat, 01 Apr 2017 14:21:52 GMT

That's not me at all. I hate to sit down and pay bills. I'd rather not have any bills to pay. It is disheartening to watch my checking account balance go down to pay bills.

i try to buy only what I need.

Re: Using Credit Cards Encourages Extra Spending 💳

judy0330 — Sat, 01 Apr 2017 14:24:56 GMT

@Mint2 wrote:
We put everything we can on our card including utilities, phone and insurance. I know this is true for some people but we have been doing this for years and have never not paid it off at the end of the month. You have to be disciplined to do this though. Some people I know can't do this but it works for us.

Mint

Same here. Everything goes on our credit card -- we pay it in full every month -- we travel a lot -- and have been all over the world flying Business Class using miles. No brainer if you like to travel and have self control.

Re: Using Credit Cards Encourages Extra Spending 💳

scatcat — Sat, 01 Apr 2017 14:23:46 GMT

@reiki604 wrote:
@Mint2 wrote:
We put everything we can on our card including utilities, phone and insurance. I know this is true for some people but we have been doing this for years and have never not paid it off at the end of the month. You have to be disciplined to do this though. Some people I know can't do this but it works for us.

Mint
I'm with you! I have one points card solely devoted to paying my mortgage, health insurance and utilities every month. Then I have the bank automatically pay off the card each month. Lots of points, no debt.

Question for both of you - do you get charged a service fee for putting utilities, mortgage etc on a cc? We use cc for the benefits (points, cash back etc, pay in full). I would gladly pay utilities if there is no penalty. My DH thinks there may be a service charge for paying mortgage on cc. I tried to "charge our last car purchase" but was only allowed to put $3000 on the card. I wanted the perks!

Re: Using Credit Cards Encourages Extra Spending 💳

Shanus — Sat, 01 Apr 2017 14:32:45 GMT

We changed over to using debit cards years ago. If the money's not in the account, you can't spend it. Easy to stay on budget that way.

Re: Using Credit Cards Encourages Extra Spending 💳

Yardlie — Sat, 01 Apr 2017 14:46:25 GMT

I like the added protection of the credit card vs the debit card. I really do not find that I spend more using a credit card. Everyone is different, but I spent more when I had Amazon Prime. We gave it up a few months ago, and my spending is noticeably less.

Re: Using Credit Cards Encourages Extra Spending 💳

SeaMaiden — Sat, 01 Apr 2017 14:47:14 GMT

That is why I always pay my cards off in full each month... it makes me accountable for what I spend. If I am writing out a check that is more than I feel is good, I cut way back on my spending and keep it in control.

Re: Using Credit Cards Encourages Extra Spending 💳

chrystaltree — Sat, 01 Apr 2017 15:01:17 GMT

I'm 57, I don't need a link or some research to tell me that...lol Good grief, that's why credit cards exist, to encourage consumers to buy things that we don't have the cash to buy now or choose not use our cash for. Yes, some immature or naive people fall into to the credit trap and get themselves into trouble. Some people make poor decisions in all areas of their lives. That doesn't make credit a bad thing. The ability to buy things on credit SPURS or economy. It creates jobs because someone has to make the things we buy on credit, someone has transport them, someone has to sell them. That puts food on people's table and it gives thoseworkers the ability to go out buy things...which creates...more jobs.

Re: Using Credit Cards Encourages Extra Spending 💳

Lucky Charm — Sat, 01 Apr 2017 15:32:38 GMT

@scatcat wrote:

Question for both of you - do you get charged a service fee for putting utilities, mortgage etc on a cc? We use cc for the benefits (points, cash back etc, pay in full). I would gladly pay utilities if there is no penalty. My DH thinks there may be a service charge for paying mortgage on cc. I tried to "charge our last car purchase" but was only allowed to put $3000 on the card. I wanted the perks!

I don't get charged any fees for having our cells, cable, ez pass, etc.

I tried to put $15K down on our last vehicle using a cc and they would only let us do 5K.

I was ready to walk because of it. They thought I was bluffing and I thought they were bluffing.

They weren't.

Re: Using Credit Cards Encourages Extra Spending 💳

akaburtonfan — Sat, 01 Apr 2017 15:37:50 GMT

I have found this to be true -- that's why I rarely use my cc anymore. Never had trouble paying it off every month just didn't like the realization that I was spending more than was necessary.

Re: Using Credit Cards Encourages Extra Spending 💳

Mint2 — Sat, 01 Apr 2017 15:44:17 GMT

Yes that is exactly what we do. Even buy heating oil etc. with that card. We earn a lot of cash back and as a bonus it makes everything so much more simple. No more writing all those checks.

Mint