Why do folks run up their CC?

[sv2007]

I don't understand. I had a CC since college (under dad's card), but I never had any more desire to spend money when charging (in fact, I didn't even have to pay any of the charges).

So, I see threads where folks run up some pretty large CC bills and am curious to know what happened? How did it come about?

1. Thank god for CC; it saved my butt from dying on my backpacking adventure (because 3rd world hospitals operated on a pay-first mentality).

2. Glad to have CC to pay for food and roof for our family. When the bill comes, we'll worry. When you're hungry, not much else matters, right?

3. Or is it a case of paying only the minimum due (even when there's money to pay all of the bill) and not notice that the amount is increasing rapidly?

How did it happen to you?

[bjl584]

I've never had a problem with credit cards, but from what I've seen it's all just tied to our instant gratification mentality that is so prevalent in our society.

Why wait 6 months to a year to save up for something that you want when you can just go get it today and then make a small easy monthly payment? Repeat that process 10 times or so, and the next thing you know you are creating an account on Savings Advice asking the forum members what to do about your $20,000 in credit card debt.

[Jluke]

Behavior/mindset

Bad math skills

[disneysteve]

instant gratification

Behavior/mindset

Bad math skills

All of that.

My wife's sister and her ex-husband used to go to an all-inclusive resort in Jamaica every year. They would charge the full cost, take the trip, and then take a year to pay it off. Then they would repeat the cycle and do it again. It just never occurred to them to reverse the cycle. Save for a year and pay cash. Then save for another year and pay cash, avoiding the debt and interest charges. In reality, they probably couldn't have done it that way because they were incapable of saving. If they saw money in their account, they would have spent it and the vacations never would have happened.

To be fair, many people end up in CC debt due to things like medical bills, divorce, unemployment, etc. They know that what they're doing is not good but they feel they have no other choice.

[phantom]

You might find this episode of The Money Show interesting. It's an interview with a woman who built up a moderate amount of credit card debt because she figured it was okay as long as she could pay her bills. I found it interesting because she was always striving to be responsible with money, but it took her awhile to figure out what that should look like.

[chd07]

Rewards!

I know it's probably not the answer you're looking for, but I always put a lot of money on my credit cards to maximize the rewards.
I always pay it off completely at the end of the month to avoid the insurance.

Use these tools responsibly and they can be a decent $money$ saver, but you're right not everyone does and they end up digging themselves into a hole.

[disneysteve]

I always put a lot of money on my credit cards to maximize the rewards.
I always pay it off completely at the end of the month

I'm sure OP was asking about CC debt, not CC usage. We also use our CC a lot both for the convenience and the rewards but pay the bills in full each month.

[Randomsaver]

Only 1 percent of population is mentally tough to take on control of credit card use. The 99% fails.

[corn18]

Only 1 percent of population is mentally tough to take on control of credit card use. The 99% fails.

This data would suggest otherwise:

http://www.valuepenguin.com/average-credit-card-debt

[Nutria]

Only 1 percent of population is mentally tough to take on control of credit card use. The 99% fails.

Oh, hush.

[corn18]

I wanted things I could not afford and credit allowed me to buy them. Too much house, too much car, too much everything. Let that continue for decades and you find yourself waking up owing way more than you can ever repay. Then the fun begins. You know you're hosed when you start paying off credit cards with other credit cards.

[pflyers85]

This data would suggest otherwise:

http://www.valuepenguin.com/average-credit-card-debt

While I don't think it's a 99% to 1% problem I think its more widespread than the 38.1% figure in the link. I don't think that figure is factoring in the number of people that once had credit cards but maxed them out and their accounts have gone to collection. Unless I am mistaken, once and an account goes to collection its no longer considered a revolving balance.

[Petunia 100]

I don't understand. I had a CC since college (under dad's card), but I never had any more desire to spend money when charging (in fact, I didn't even have to pay any of the charges).

So, I see threads where folks run up some pretty large CC bills and am curious to know what happened? How did it come about?

1. Thank god for CC; it saved my butt from dying on my backpacking adventure (because 3rd world hospitals operated on a pay-first mentality).

2. Glad to have CC to pay for food and roof for our family. When the bill comes, we'll worry. When you're hungry, not much else matters, right?

3. Or is it a case of paying only the minimum due (even when there's money to pay all of the bill) and not notice that the amount is increasing rapidly?

How did it happen to you?

The first time I said "I do" and shortly thereafter learned I now had a great deal of credit card and other consumer debt. It took about a decade to claw my way out of that.

In 2010, I accumulated about 4k of credit card debt in just a few months, and that was when I landed at Saving Advice and began tracking my spending and keeping a written budget for the first time in my life. The debt was from a fun long-weekend in Vegas and helping an unemployed family member get back on their feet.

[pflyers85]

My credit card debt was mostly accumulated during college and shortly after. Much of my earnings for my part time job during school went to my rent and there was little left over for everything else. I certainly had fun during school but the debt filled hole that I created for myself was certainly not worth it. I had to live at home for a couple years after college and worked a lot of OT to finally claw my way out. You live, you learn.

[Nutria]

helping an unemployed family member get back on their feet.

I hope it was appreciated and used wisely.