To Charge or Not to Charge - The pitfalls of a Credit card
People always seek instant gratification in all things we do, from trying to lose weight to buying the latest gadget. It’s almost as if the child within us takes control and flips the logic switch to off the instant we see that latest gadget or clothing that we absolutely must have or the world will come to an end. You can actually visualize the kid in you stomping his foot screaming at the top of his lungs that he wants it now!
Coffee - Can be a daily expense - Do you really need it ?
So, you whip out the credit card, hesitate for a moment as your logic tries to take over, but it’s only for a moment as the kid gets louder and louder. Then a month later when your credit card bill arrives you blanch as you realize there is absolutely no way you can cover your shopping so you will have to just pay the minimum. Or even if you can pay the full amount why should you, right? After all you can use that money to buy something else.
Yes, there is a very good reason that the financial industry makes such huge profits and pays marketers and psychologists so much. The credit card is designed purely to take advantage of the human need for instant gratification and banks know that most people will not pay off all their monthly purchases because they can’t so the interest kicks in, which is usually obscenely large.
The other thing banks rely on is people’s love of denial. In other words, no one sits down to actually work out how much that new telly is going to cost them if they pay interest on it for five years. Let’s see, if that brand new, sparkling TV that is screaming your name costs £500, after 5 years at a rate of 17% you end up paying £750 in total. You end up paying 50% more for it at the very least, as this doesn’t cover other fees that pop up which you don’t notice.
Why not try a novel approach and cut out that Starbucks coffee you get twice a day and bring your coffee from home? That would average a minimum of £60 saved per month and there are plenty of other places where you can save a little extra cash so you can have the money to buy that TV in a few months without having to pay the bank for the “privilege” of getting it the day you see it. Who knows, you may even decide it’s not worth buying it after all because it was only an impulse at the time.
