When debt gets to be too much, you might start looking at your credit card bills. What you’ll be surprised to find is that you’ve spent more than you thought you did. In fact, this can get to the point where you can’t pay off the card and then you start compounding interest on top of what you owe. That is often one of the key steps that happens as people move toward bankruptcy, simply because the debt becomes overwhelming.
But why does this happen? You didn’t set out, intending to spend too much money, and many people end up blaming themselves for their own financial situation. But the truth is that the deck is stacked against you, and it’s been done intentionally.
The thing to remember is that credit cards actually play a psychological trick where they convince you to spend more money than you would have otherwise.
This trick is based on the fact that you are taking out a loan, so it’s easy to imagine that this is just something you can deal with later. If you don’t have to pay that credit card off for 30 days, it’s tempting to buy an item and then decide that you have a month to figure out how you’re going to pay off the bill when it comes due.
On the other hand, if you had cash, you simply wouldn’t have this option. You wouldn’t be able to make the purchase and so you wouldn’t end up with that debt. But the availability of the credit card makes it possible.
Additionally, studies have found that people will simply spend 12%-18% more even on purchases that they would’ve made. If you go out to eat, and you have a certain amount of cash in your wallet, you only order food that is going to cost less than the amount that you brought. But if you know that you have a credit card, it’s easy to add on a dessert or another drink or anything else. In short, going shopping at the mall, a restaurant, a bar or even online just tends to cause you to spend more money when you use that credit card.
If you’re now realizing that the credit card has manipulated you into spending too much money, you probably want to know what steps to take next. Bankruptcy is one that you may want to use, so be sure you carefully consider your legal options.