The credit card was the way to go when it came to paying bills in the 90’s and at the turn of the 21st century. As the economy has come back down to Earth, the way that people use credit is significantly different today than it has been in the past two decades. However, reliance on credit cards is still a hard habit to shake off. With credit being harder to get these days, it can be a shock to try to make purchases without a credit card.
When a person uses a credit card to make the majority of purchases, it can lessen the ability to save and plan for purchases. A credit card allows a person to make a purchase today and pay off over time. It is instant gratification that can cause a sense of entitlement over time. Learning financial patience may be a skill that is less developed and can cause someone to go into debt simply because they want something now.
Using credit turns money into just a number. If the balance on the card isn’t completely maxed out, it means that there is still room to spend in the mind of a habitual credit user. While not everyone falls into this category, it often becomes the case that as long as there is money on the card, it will be spent. This can cause problems if credit isn’t available as it can take a long time to get out of that debt and causes the borrower to have to re-learn proper spending habits.
Going a little further with that concept, a person who relies on credit for making purchases might not appreciate the actual cost of an item. When paying cash, a person is limited to the amount of money on hand, which means that the shopper might compare prices and try to get the best value.
Alternatively, it might mean that the person might just stop shopping altogether once the essential items have been purchased. Someone who use credit might just keep spending because a credit card feels like free money. It can cause a consumer to not fully understand the true value of the dollar being spent on an item.
When all of these habits are put together, it usually ends up with a borrower with a huge debt. Running up a huge debt is easy, but paying back that debt is hard. Not only can be a long road to paying off credit card debt, it can be even harder to get credit in the future. It also often ends with a consumer who has no idea how to budget, save or come up with a solid plan for their money later on in life.