With unsolicited offers of credit cards coming ‘free-for-life’, its not surprising that many consumers will find that, with easy credit in hand amounting to a few extra thousand dollars, there’s a tendency to treat it as extra spending money and over-indulge with bliss..till the end of the month, that is.
The real danger is when credit card usage passes the barrier of overspending and enters the realm of addiction. Yes, there are increasing numbers who will treat cards as extra spending money and go on a splurge , thereby forgetting about the liabilities of spending beyond their means and ending up with huge balances at the end of the month, leading to, in extreme cases, financial ruin.
Credit card addiction (I call it credit carditis) strikes when you least expect it. As with most addictions, the person with the problem is often the last one to realize that they have a problem.
How do you spot the warning signs of credit card addiction?
According to financial planner Julie Casserly, you’re there if you have 3 or more of the following features:
- You never have cash in your wallet
- When you do have cash, it burns a hole in your pocket.
You buy things just because they’re on sale, or because they make you feel better if you’re upset.
You have more than two “branded” or store credit cards.
You and your spouse or partner argue over money.
Credit cards balances are growing — and not being paid down — each month.
Your cards are all maxed out. But instead of paying them off, you open new ones in order to have additional credit.
You don’t know how much you owe on the cards you have.
You own several things you’ve never worn, used, etc.
- You hide your credit card statements from your spouse.
How do you cure this addiction?
- Spend cash – this reduces the risk of impulse purchases.
- Hide the card – out of sight, out of mind.
- Set your short-term and long-term financial goals.
- If all else fails, seek counselling. There’s some websites worth looking –Debtors Anonymous,
Some governments feel that by imposing an annual surcharge/fee for using each credit card, this will help reduce the number of cards and help solve the addiction. As one can see from the experience of taxing cigarettes, this method is highly ineffective!
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