𝓦𝒆𝓵𝓬𝓸𝓶𝒆 𝓽𝓸 𝓽𝓱𝒆 𝓽𝓱𝓲𝓷𝓴 𝓽𝓪𝓷𝓴

Not only lack of self-control often misleads us humans to spend more than there is. It also has to do with the fact that the pain of paying with cashless payment means is not so strong.


Between self-control and debt trap - the psychology of the credit card
Credit cards do not have the best image because, according to public opinion, they tend to spend more on consumption than they can afford. And young people in particular would therefore incur more debts than they could through casual consumption.

How dangerous are credit cards?

There are also numbers that support this thesis: a study from 2004 shows that just under 20 percent of 18-24 year olds in Switzerland can hardly control their buying behavior. And from other countries we know that most credit cards are made responsible. In the United States, for example, more than half of respondents to a study believe credit cards are a debt trap.

From a rational point of view, this aversion to credit cards is illogical: After all, they offer interest savings and often also bonus point programs. If you want, you could make the most of it. And yet, many people do exactly the opposite - or abstain altogether on this means of payment, so as not to be tempted to spend more than they actually have.

To understand the psychological context behind it, one key question must be answered first: Do people with credit cards actually spend more on consumer goods than people without? The short answer from the experimental studies on the topic is: Yes, they do. They are much more likely to buy and spend more money if they can pay by credit card instead of cash.

Richard Feinberg found in several experiments that only a clearly visible credit card logo is sufficient to increase the willingness of customers to pay.

Pay cash hurts

The reason for this credit card effect lies in a psychological phenomenon that is also increasingly being discussed in the economy: in the pain of paying. These psychological costs are particularly interesting in the context of credit cards, because they depend not only on the price, but also on the type of payment instrument.

Paying for people hurts people the most because the money is physically visible. On the other hand, those who pay by credit card will only be confronted with the actual amount at the end of the month, plus any other credit card issue. Not only does this mean that consumers can not remember credit card-paid amounts more than cash-they also hurt less.

This is not the lack of self-control. This behavioral pattern ensures that many people save too little because they succumb to short-term temptations. This too can make dealing with credit cards problematic.

But it does not have to be like this. Many simple ways of tackling the phenomenon of lack of self-control in financial matters are even widespread: debit cards, for example, severely limit short-term money - and consumers like to use it for just that reason. They are therefore less tempted. You could also think about down credit limits. Or maybe even credit card accounts that customers can deposit in advance. Such self-tie technologies can also be commercially viable. And at their core, they actually help many people get a grip on their self-control problems.