When you pay with credit cards, your brain is activated to create cravings for more spending
You already know that buying things with a credit card carries the risk of getting you deeper into debt. It’s just too easy to pay the minimum and reach your goal of being debt free for the next month. However, new research shows that the problems that credit card use can cause are even more insidious. Researchers at MIT have given volunteers an MRI to see exactly what happens in our brains when we shop with plastic instead of cash.
Credit cards illuminate our reward system
During the study, participants were shown items on a screen that they could add to a virtual shopping cart. Half had the option to pay with cash, the other half by credit card. Those who used the cards were more likely to buy more expensive items. They also spent more overall.
The reason for this could be the brain reaction associated with using the card. The MRI showed that the region of the brain associated with pleasure and rewards was activated when the card was used. This area of the brain is responsible for releasing dopamine.
Visual cues like credit card logos and buy it now buttons have also been displayed to spark cravings for rewards. The study’s authors say our brains have become chronically sensitized from previous experiences with credit cards. Credit cards are associated with enjoyable purchases so our brains are prepared for pleasure when we expect a purchase.
Why cash doesn’t send the same signals
One interesting thing that the researchers noticed is that paying cash for the same enjoyable purchases doesn’t trigger our reward system in the same way. This is likely because paying with a credit card instead of paying with cash makes the cost abstract. It’s easy to get the money out of your head when you don’t see it leave your hands.
Break overspending habits
If your goal is to get debt free and resolve past credit problems, the first step is to readjust your relationship with money. Use cash only for recreational purchases such as games, restaurant meals, and beauty products. Not only does this ensure that you only buy what you can currently pay for. You are also likely to make smaller purchases than if you were paying with a card.
Changes don’t happen overnight. It can take time to repair old patterns and replace them with new ones. In the meantime, keep key goals like being debt free in the foreground. While there aren’t the immediate rewards that a pleasant purchase offers, the long-term improvement in your wellbeing is worth it.
Do you need help getting started? We have helped thousands of people with loan repair so they can achieve their goals. Contact us today for a free consultation.