Psychology of Credit Card Spending: why we overspend and how can we stop this

[TechnoFinoTechnoFino is verified member.]

Hello TFCians,
"I have posted an article on the TF Blog regarding the psychology of credit card spending - why we overspend and how we can prevent it.
Read it here: https://www.technofino.in/psycholog...nding-overspending-and-strategies-to-stop-it/
In the article, I shared my opinion and a rule that everyone should follow to avoid overspending.

Credit cards can be double-edged swords, and I would love to hear your thoughts on this topic.

How do you prevent yourself from overspending when using a credit card? Let's discuss."

 

[a_tease]

These attraction of spend based milestone benefits is a huge psychological tactic to make us spend more. I would have never thought about investing in NPS or paying rent with a credit card and paying extra 1-2%.

 

[phagocyte536]

These attraction of spend based milestone benefits is a huge psychological tactic to make us spend more. I would have never thought about investing in NPS or paying rent with a credit card and paying extra 1-2%.

Seriously. I like infinia more over magnus for this reason.

 

[TheRecharger]

Axis is just trying to make <1L spending ppl; spend 1L or above with their Magnus Card.

 

[Cardmarvel]

These attraction of spend based milestone benefits is a huge psychological tactic to make us spend more. I would have never thought about investing in NPS or paying rent with a credit card and paying extra 1-2%.

Why would you consider paying rent or investing in NPS as wrong? IMV those are some of the best ways to hit the milestone (as long as rent payment was eligible)

 

[moneyMaker]

lorem ipsum dolor sit amet

 

[starstruck]

In my mind I just decrease the account balance with the credit spend. - Like I was very scared of credit cards when I started out so its pretty automatic at this point.

Same Here. Maintain a google excel sheet basis Bill generation dates of all cards. Total sum tells me how much money will be gone from my salary when they come.

 

[Suspicious Activity]

I used to use Phonepe UPI for payments where credit cards were refused. Millennia for all other spends. After taking the Tata Neu card(LTF using a top from this forum), I can now put all my spends, including UPI, on HDFC cards. Helps in keeping a running tally.

 

[thanix]

Why would you consider paying rent or investing in NPS as wrong? IMV those are some of the best ways to hit the milestone (as long as rent payment was eligible)

I guess the post was about paying extra for these transactions. I also belonged to the category as I never allowed to charge extra for any service. Instead of credit card, I will simply use debit card earlier and UPI later.

 

[bonheur]

I've been thinking about opening a second bank account anyway, but @TechnoFino's strategy to do that for keeping better track of cc spends makes the case even stronger.

My primary account is with HDFC, and a dormant IndusInd account. Any suggestions on whether I should open a second HDFC account (for easy TPT + Platinum dc), or revive the IndusInd one, or try another bank? If I go with HDFC, will they need a second mobile number (which I do have) or can they open a new account against my primary phone and email itself?

 

[Karthik24]

If i am transferring all the amount to credit card (even before the bill generates).. will it have any impact on Cibil?

 

[WhoU]

If i am transferring all the amount to credit card (even before the bill generates).. will it have any impact on Cibil?

Care to elaborate on how is it linked to psychology of credit card spending?

 

[Karthik24]

Care to elaborate on how is it linked to psychology of credit card spending?

Not related to psychology.. but on the solution to stop overspending... without having to create secondary account.. if we instantly transfer from primary to CC account

 

[WhoU]

Not related to psychology.. but on the solution to stop overspending... without having to create secondary account.. if we instantly transfer from primary to CC account

Okay I get it now. I think prepayment will not hugely impact your credit score, though it will mean you have a very low credit utilization.

I would suggest to have a dedicated savings account for credit card bill payment (which also gives some cashback) and transfer money to this account as soon as you use a CC. Pay 7 days before due date to earn maximum interest benefit.

 

[TechnoFinoTechnoFino is verified member.]

If i am transferring all the amount to credit card (even before the bill generates).. will it have any impact on Cibil?

No impact at all..

 

[fcmaTanveer]

I used to use Phonepe UPI for payments where credit cards were refused. Millennia for all other spends. After taking the Tata Neu card(LTF using a top from this forum), I can now put all my spends, including UPI, on HDFC cards. Helps in keeping a running tally.

can you please help me to get connect with (Top from this forum)? I am having HDFC Regalia LTF and wants to get Tata neu infinity LTF

 

[anirban.choudhuryanirban.choudhury is verified member.]

Not related to psychology.. but on the solution to stop overspending... without having to create secondary account.. if we instantly transfer from primary to CC account

But by doing so , you are not leveraging the main feature of credit cards , that is interest free 48-50 days . Rewards are just a by-product of credit card , main feature is interest free time .
My funda is that if you are only using credit card to earn rewards , most probably you have entered the reward race , and there is a 95% chance that you are doing Manufactured spends

 

[caabhi]

It is very important to keep the usage of CC under check so as to not get yourself in debt trap due to the exorbitant interest rate applicable. This is more to do with financial discipline though. Advice of @TechnoFino is useful for people who are skeptical and who fear about the overspending and his advice helps in ringfencing this particular concern.

For advanced users here in the forum, who have mastered the art of dealing with the credit this is not applicable.

I agree with the views of @anirban.choudhury, interest free period is useful and one of the main benefit of CC apart from building credit history.

 

[Survivor35]

But by doing so , you are not leveraging the main feature of credit cards , that is interest free 48-50 days . Rewards are just a by-product of credit card , main feature is interest free time .
My funda is that if you are only using credit card to earn rewards , most probably you have entered the reward race , and there is a 95% chance that you are doing Manufactured spends

true .I agree on this

 

[Deleted member 6719]

But by doing so , you are not leveraging the main feature of credit cards , that is interest free 48-50 days . Rewards are just a by-product of credit card , main feature is interest free time .
My funda is that if you are only using credit card to earn rewards , most probably you have entered the reward race , and there is a 95% chance that you are doing Manufactured spends

Completely agree. I find it funny when people chase rewards like 10k coupon from taj phaj on spending 1.5lacs on their ShamX card....errr...
Haters gonna hate. But it's true that in India, this company runs on inciting greed in potential customers (whereas in reality they're getting peanuts).