I have a rather unusual financial guardian. It protects me from misusing, abusing or over-using my credit card. It operates as an effective form of credit control, constraining my spending.
As such, it ensures I live within my means, that I don’t run up debts, that I only purchase things if I have the money to buy them. It also means that I don’t tend to use my credit card for extravagances or for buying things on a whim.
My trick is in the way that I perceive my card and the credit facility. It’s basically an attitude of mind – a psychological restraint.
My thought process is this: when items are bought on a credit card I feel like I’m paying for them twice; once when I actually purchase the item and secondly, when I pay the credit card bill, a month or so later.
Now, being a saver by instinct (others might call it being tight), I don’t like spending money. For me, it’s an unpleasant experience. So, the thought of putting myself through two lots of pain rather than just having to suffer the once really doesn’t appeal.
That’s why I always tend to be reluctant to buy things on my credit card. Spending money hurts; spending it twice on the same thing hurts doubly.
Expenditure on items such as bills, insurances, licences – things that have little physical representation – are particularly irksome to me. I don’t like paying for them in the first place so to feel that I am paying for them twice is even more distressing.
To pay for an item with cash or a debit card means that it is over and done with straight away. The transaction is immediately finalized and consigned to history. I might not have liked spending the money but I can, at least, now forget about it. I can put it behind me.
In contrast, credit card purchases linger. They can feel like a torturous pain as, faced with the bill, I am constantly reminded of their presence. It is only when they are paid off that I am released from their hold.
For somebody who doesn’t like spending money unless they have to, you might think that using a credit card would be an appealing prospect – I’m not actually parting with any money. It’s a delayed payment. I can pay off the purchase at some point in the future. I can keep my money for that bit longer.
But for me, I know what it really means. I know that I will eventually have to pay. I know that it means two lots of pain and I would much prefer to suffer only the once.
Any credit card bills I do receive get paid straight away before any interest charges are incurred. If I was in a position where I couldn’t pay off the full bill each month then that credit card pain would be even more agonising, those credit purchases even more resented.
Of course, it may be that if I did need to take advantage of the extra repayment terms offered by my credit card, then perhaps I wouldn’t be so psychologically prudish.
My psychological restraint remains strong even in the face of temptation:
- Retailers seek to lure me into making purchases – attractive displays, promotional offers, enticing adverts. I can buy now and pay later. They make it so appealing, so easy.
- My bank even offers me reward points for using my credit card. Such points are effectively a discount on my purchases. But I am still not persuaded. It seems that it is not incentive enough to offset the thought of that twofold pain.
Admittedly, I do use my credit card with certain large purchases but that is only to take advantage of the better consumer protections offered when using a credit card. Even then, I am not comfortable with it. It’s always a relief when the card is paid up and the amount owing is returned to zero.
Strangely, other debts don’t seem to instil this angst. With a car loan or a mortgage I’m not so aware of the debt. The repayments are automatically taken from my bank account each month. They’re just another monthly expense. They’re not something I think about too much. But with a credit card it doesn’t feel the same; with a credit card there is a repeated anguish.
When considering this psychological credit card distress, I did think the issue might be the thought that if I hadn’t paid for an item then I might not feel that it belonged to me and shouldn’t therefore use it. What if I bought something on my credit card and it gets damaged before I’ve paid for it – how would I feel then? Even worse, what if I buy my weekly food shopping on my credit card – I will have eaten it all before I’ve paid for it. I wouldn’t feel comfortable with that – having to pay for something that I no longer had possession of.
Maybe I’m just a bit old school. I haven’t embraced new financial attitudes and more modern ways of managing my finances. As evidence, I do confess that it has taken a while for me to get used to contactless payments rather than using notes and coins to buy things.
Yet, I have to say, even if it is a bit of an old-fashioned attitude, this psychological phobia has served me well. It has ensured that my credit card usage has been moderated and hasn’t got the better of me. I am fully aware of the implications of any purchases I make with it. I know there is always a second pain that will follow.