Millions of Americans have credit cards, and most do not use them responsibly. In fact, the majority of credit card holders do not even know how to use their credit cards responsibly, but does the very fact of having a credit card and a credit card limit available to spend make some customers spend more? Some experts say yes, even if the borrower knows that they will end up paying a great deal more on money they spend with their credit card. The fact is, many people unconsciously factor in their credit card limit when they think about how much money they have to spend, and if they have already spend their paycheck, the credit card is a temping option when they want something.
This question has been the focus of heavy debate for years. While most experts grudgingly recommend credit cards to consumers, because they are important elements of building credit so that eventually the consumer will have a solid enough credit history to be able to qualify for a mortgage loan. Also, credit cards can be extremely important in an emergency when no cash is available, such as in the case of a car breaking down and needing an immediate repair. However, most consumers don’t spend credit cards this way.
To understand the answer to the question, the behavior of those who use credit cards, as opposed to those who don’t must be examined. A study conducted by Dunn and Bradstreet found that on average, a consumer will spend between ten and twenty percent more when using a credit card than when paying with cash or with a debit card. For instance, they found that those spending at McDonald’s Restaurants spend nearly double when paying with a credit card and when using credit cards at vending machines, the transaction was nearly twice that of those paying cash.
However, spending on a credit card is not necessarily a bad thing, as long as it is paid off each month. When a consumer uses their credit card and then pays off the balance, they get a good mark on their credit report. Credit cards should be used for authentic purchases, however; those which one would normally be paying for regardless of the form of payment. Then, the balances must be paid off immediately so that high interest charges do not start making the debt too expensive. Whether or not the ownership of a credit card makes consumers spend more, the task to keep it under control falls upon each individual consumer.
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