Houston Credit Card Debt Attorney
Do You Have More Credit Card Debt Than You Can Handle?
Studies have proven that we are much more likely to spend money, and spend more money, if we use a credit card. There is a disconnection between the cost of the item and how much money we are willing to spend when we use a credit card. In fact, when we use a credit card instead of cash, we spend on average 47% more. It is important to understand how credit cards affect our spending because 54 million American households carry credit card debt. On average, each of these households has over $15,000 in credit card debt. If you are having difficulty paying your credit card bills, a Houston bankruptcy attorney can review your finances and help you determine whether bankruptcy or an alternative to bankruptcy is a good option for you.
The disconnection between cost and payment is a crucial piece of the equation. In general we associate buying new things with positive feelings, but paying for them with negative feelings. Many Americans shop emotionally, that is, they do not buy necessarily what they need, but what they want. Instead of considering our budget, we consider whether our neighbor or a celebrity has a similar item, or whether something new will distract us from other problems. When we pay with a credit card, we are more likely to shop emotionally because the joy of buying something is not mitigated by the cost of paying for it.
Credit card companies use information such as this in order to make more money. Other psychological factors of credit card use are also in play. For example, researchers have studied how having a minimum payment affects our credit card debt; when we have a low minimum payment on a credit card, it acts as an anchor, bringing down the total amount that we pay. Even if we are able to pay more, the anchor helps ensure that we don't feel like we have to. Thus, the credit card company is able to make more money from the interest that we owe. The disconnection is also affected by special intro rates; we tend to "discount" the negative feelings of payment when it is in the future. Even when we know that the special rates will not apply in 6 months or a year, we underestimate our future feelings of negativity toward them because they are in the future. Another tactic that credit card companies use is raising the spending limit annually. Even if we do not need a higher spending limit, having one compels us to spend more, and again, owe more. This further drags us into credit card debt.
Don't let credit cards manipulate you into spending more and owing more. Contact a Houston Credit Card Debt Attorney for a free consultation about your financial situation.