Credit cards are often linked to bankruptcy, and it sometimes relates to their high interest rates. People may be attempting to pay off their debt, but they can’t do it because the interest adds so much to that debt every month.
But how did they get into debt in the first place? It may be that their credit card psychologically tricked them into spending more money than they wanted to. Studies have found that consumers tend to spend more on credit cards than they do with cash.
Why does this happen?
There are two main reasons why this happens. The first is that the transaction doesn’t always feel “real” to the consumer.
In other words, if you had to take a $100 bill out of your pocket and hand it to someone in order to receive a product or a service, you would likely think carefully about that transaction. You would be well aware that you were giving that person your hard-earned money. But if you simply charge it on a credit card, it doesn’t feel real and you just think of it as a charge that you can figure out how to pay off in the future.
Additionally, credit cards make it easier to make impulse purchases or to spend more than would even be possible with cash. If someone only has a $100 bill, that is the most that they can spend. But if you want to make an impulse decision that costs $150, you can still do it with a credit card.
Make no mistake about it: Credit cards are designed to get you to spend money. If this leads to overwhelming debt, then you need to know about bankruptcy and all of your other potential legal options.
