Why Your Brain Falls for the Credit Trap

Some reasons it can feel like 'free' money

Do you carry much cash in your wallet? Today, we may have more banking and credit cards on hand than actual paper money. Online, you shop, tap on your phone and it’s on its way. It’s a virtual exchange.

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For some of us, all this convenience makes it a little too easy to overspend. Clinical psychologist Scott Bea, PsyD. explains why, by nature, our brains struggle to fully grasp the concept of credit.

He says the exchanges we make with credit cards are challenging for our brains to interpret. “Somewhere, our brain knows we have to pay for it, but it gets harder to actually pay for something without a physical exchange, and especially after we’ve consumed it.”

This challenge we have is with something called “sense processing”— the ability of the human brain to make sense of things by using the five senses.

The answer is in our history as humans

Historically, when people would trade and barter, there was a very real sense of what we were trading for; we gave up something to get something else. Today, those lines can more easily blur.

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“Nowadays, there’s no sense of loss at all. What you are buying is in your online cart, and you pay for it with the click of a mouse. There’s no attachment to the true loss or the feeling of loss,” he says.

The more we become removed from real symbols of money, the easier it is for us to part with something without a second thought.

He said it’s very similar to what happens in a casino when people are handed chips instead of real money. The more they become separated from the actual tangible money, the easier it is to get into trouble.

Likewise, when we swipe a card or click a button on a mouse to make a purchase, our brain struggles to calculate the true cost because we’re not physically handing something away. When the bill comes in the mail, Dr. Bea says we’re so far removed from the actual activity that it doesn’t register in our brains.

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How to overcome the credit card trap

Dr. Bea believes that if we can be more conscious of what’s really going on — that there really is an exchange being made — the better off we’re going to be.

He suggests keeping a ledger of every expense to help you get in touch with the true cost of spending.

“If you can take a moment, right then and there, and note when you spend, the physical act can stimulate your senses,” he says.

He admits it’s not easy to do, because it involves creating a new habit. However, once you create this habit, it can help you make better judgments about how to use credit.

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