Being a bankruptcy paralegal has given me the opportunity to assist people during one of the most stressful times of their financial lives. It has also afforded me the opportunity to observe some of the stupidest excuses and reasons that people use credit cards. I do not mean to sound overly critical or judgmental. Believe me, those of us who have shopped on Black Friday just because stores advertise “huge sales” have no room to cast plastic stones at others. However, just when I think I have heard every ridiculous and foolhardy reason for using credit cards, another client provides me with a new justification for how their credit card balance has more digits than their hands.
1. I saved money because it was on sale. (The proverbial “Wife’s” excuse) Okay, yes, I have used this excuse with my husband but we both knew I was only being silly. Unfortunately, there are those who will justify a luxury purchase by reasoning that they “saved” money because it was such a great deal. Just because “You Saved $100” is printed at the bottom of the sales receipt, it does not mean you have more money than before you purchased the item. Rather than fall into this trap, note the price of the item and comparison shop before you reach for the plastic.
2. It was her birthday! (a/k/a “Guilt”) I love to buy gifts for family and friends (complete strangers are good too); however, this is not an acceptable reason to incur debt. There is no reason to feel guilty because you do not have extra cash to buy a gift. Make a card, bake a pie or give of your time if you are strapped for cash. Your family and friends should care more about spending time with you than what you can purchase for them – – especially if they know to purchase a gift will cause you to incur credit card debt.
3. I deserve it! (The Reward Shopper) I have heard this one more times than I have shredded a Visa card bill. Movies and television have portrayed shopping as a reward for losing weight, getting a new job, falling in love or really for any reason whatsoever if it means you spend money. You may think you deserve that flat screen television, gaming console and entertainment center now because it helps you relax after a long, stressful day at work (and the salesperson agreed). Unfortunately, you will be paying on the credit card bill long after you have lost the controls to the gaming system and the television has scratches from your two-year old who was not even conceived when you purchased the high-dollar play toys.
4. I saw it and had to have it! (The Impulse Shopper) This is a deadly trap for the credit card user. Unfortunately, credit cards make it too easy to impulse shop because they take away the immediate sting of the purchase. Since credit card purchases do not result in cash immediately leaving your wallet, it is tempting to purchase that new pair of designer shoes thinking “I will just pay for them next month.” However, this type of credit card use typically results in overspending and high debt to income ratios, in part, because it feels as if you were just “given” your item without paying for it. Before pulling out the credit card, give yourself one week to think about the purchase – – do I need this or just want this and can I afford this item or am I spending recklessly.
5. It pays me to use my credit card. (The Living-in-a-Fantasy and Grasping at Straws Shopper) This is a trap that credit card companies have cleverly used to convince consumers that using credit cards is actually a benefit to them. Points, cash back and rewards are nothing more than an ingenious marketing ploy designed to deceive consumers into accumulating debt and paying interest on that debt to the credit card companies (you are paying far more in interest than you are receiving in value from your rewards). If you cannot pay the credit card balance in full each month, you are losing more money than your “rewards” are worth.
Careful use of credit cards can have benefits; however, once you have departed on the slippery slope of justifying reckless credit card spending chances are you will end up at the bottom of a heap of debt.