It seems that with the news that our economy is stabilizing, people are feeling more confident in their financial situations. In a study by TotallyMoney.com, it is projected that credit card spending will increase by 8% in 2014. The majority of this increase is attributed to increased consumer confidence. When consumers are more confident with the overall economic situation, spending tends to go up. The issue here is that is it not just spending, but credit card spending.
Credit Card Debt
According to NerdWallet, the average US household has $15,270 in credit card debt. Since we are using averages, we can assume that the average will increase another 8% this year. This issue shows that just because consumer confidence is growing, it doesn’t mean financial literacy is. Instead of focusing on paying down debt, people are spending more on their credit cards.
It has been shown over and over again that when people feel financially secure, they tend to spend with less worry. The issue behind this is that there are too many that are not really financially secure. Why would you spend more if you already have over $15,000 in credit card debt? I attribute it to people’s spending mentality. When you don’t have the right mentality to handle your money, you are going to make bad money mistakes. This leads to debt and a lot of it.
Credit Card Spending
I used to be in a lot of credit card debt, over $50,000 to be truthful. During my entire time that I paid off my debt, I never hated my credit cards. They weren’t the problem. It was how I viewed my money and my spending. After I paid off my last credit card, I still didn’t hate the card. They can give you a lot of options and purchase security. The issue is that most people don’t know how to use them properly.
It has been over a year and a half since I paid off my last credit card and I still have a good relationship with them. The funny thing is that I only use my credit card to buy things. Why? It makes my life easier when I budget, but I also don’t overspend on the card. I use it just like I would my debit card. I earn good rewards by using my cards, and I have even started to churn cards in order to get great rewards. I don’t recommend churning cards unless you have a good credit score and pay off your cards every month. No floating balances over month to month.
I attribute my ability to use my credit cards for every purchase because of my mentality shift. I respect my money and understand where I went wrong when I was in debt.
Will You Spend More?
So, do you think you will be spending more on your credit card this year? I know that I don’t plan on it, unless prices go up. If you have credit card debt, then you shouldn’t be spending anything on your card. You need to focus on paying it off. Don’t be a part of this statistic and make a change to your financial situation. If you don’t have the control of your cards, then get rid of them. Until you can understand why you overspend, then you don’t need to fuel for that fire.
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