The 7 deadly credit card sins
Are you headed for credit card hell? Maybe it's time to trade vice for virtue
There are the seven traditional deadly sins, but they also have financial equivalents. Commit one or more of the financial seven deadly sins, and you might find yourself headed straight for credit card hell.
That plastic in your wallet makes it easier to fall prey to temptation, but with a little help from personal finance experts, it shouldn't be too hard to trade vice for virtue.
An insatiable desire for material possessions -- and using credit to buy them -- can lead to loads of debt. Melissa London, a public relations professional in North Carolina, says that after a divorce a few years ago, she racked up a debt of more than $25,000 on six credit cards. She admits to succumbing to almost every credit card sin, including greed. "I would go out for fabulous dinners with friends, pamper myself, and fill my closet with high-end designer clothes," London says. Her most frivolous purchase: not one, but two, pairs of pricey Christian Louboutin shoes. "For some reason -- mind you, I was a stay-at-home mom at the time -- I really felt the need to have designer three-and-a-half-inch stilettos," she says.
For consumers tempted by this sin of excess, Gail Cunningham, vice president for public relations for the National Foundation for Credit Counseling, recommends a financial reality check. "It's important to take an honest look at your finances, admit you have a finite amount of money, and make choices about how to spend it," she says. "Being greedy can lead to financial ruin."
There's no doubt consumers often overindulge -- look at the burgeoning obesity epidemic in the United States and elsewhere -- and it's easier than ever to finance this gluttony with plastic, according to Larry Winget, author of "You're Broke Because You Want to Be: How to Stop Getting By and Start Getting Ahead." "I was standing behind a woman in an airport recently, and she tried to charge a candy bar on a credit card and it was declined," Winget says.
Instead of pulling out a credit card to buy junk food or booze you could end up paying off years later at an exorbitant interest rate, carry cash for small indulgences -- or skip them. Winget advises, "If you can't buy a Snickers bar with cash, chances are you don't really need it." But Cunningham, who often pares spending and cuts calories by splitting a restaurant meal with her husband, says: "Cutting back is much easier than cutting out."
Coveting shiny items bought by friends, neighbors -- and even people on TV -- can lead a cardholder to temptation. "We're hugely susceptible to watching people on TV and saying 'I want that now,'" Winget says. "You watch stars walking down the red carpet at the Oscars, and by noon the next day there will be stores selling knockoffs. Clothes are one of the biggest ways we envy other people."
Seeing others with new high-tech gadgets also can cause envy, says Steve Rhode, a consumer advocate with GetOutofDebt.org. Rhode recently counseled a college student who wanted an iPad because his all of his friends had them. "He wanted to put one on his credit card, but his cards were all maxed out," Rhode says. "I said, 'Don't put it on the credit card.'"
Cunningham's advice: Only buy a coveted item with your credit card if you can pay it off right away. "You aren't going to be the envy of anyone if you go into debt," she says.
There is no question that lust -- whether in the traditional sense of the word or the more general sense -- can get consumers into trouble with their credit cards. "There's just this lust for more -- this insatiable desire to have the newest and the best," Cunningham says.
Sometimes, though, lust is just lust. Rhode once counseled a client who convinced his wife to get a $15,000 breast augmentation he couldn't afford -- and put it on his credit cards. "I asked him why he had done that," Rhode recalls. "He said 'Well, they just look so good.'"
If you're lusting after something, experts recommend waiting until you have the cash to pay for it.
Giving in to sloth can lead to late fees, lack of clarity and paying too much in interest, according to experts. London says laziness contributed to her racking up a five-figure credit card balance. "There was a lot of sloth -- I was too lazy too look at my statements and be on top of what was going on," London says.
Personal finance experts say it's important to open credit card statements as soon as they arrive, scrutinize them to spot any added fees, mistakes or fraudulent charges -- then pay the bill right away. "If you're lazy about organizing your finances, that's a real problem," Cunningham says. "You need to work hard and really get on top of it."
Consumers also should put effort into periodically shopping around for the best credit cards, experts say. "People, out of pure laziness, won't bother to look for a better deal or opportunity," Winget says. "Most of the time, you don't have to leave the company you're with to get a better deal. You just have to be persistent, and it might take five, six, seven calls."
Wrath can cause big problems when a person uses plastic as a weapon to get back at a spouse or lover. In fact, personal finance experts have a name for this phenomenon: revenge spending.
When Winget hosted the A&E series, "Big Spender," in which he helped people struggling with debt, he met a couple who fell victim to revenge spending. The wife, Winget recalls, was addicted to shopping on eBay and had filled a closet with purchases she hid from her husband. "When he did find out, the way he got even was to go out and buy a motorcycle," Winget says.
Racking up debt on credit cards to get revenge typically backfires. In the case of the eBay shopper and her husband, it just got them in deeper financial trouble. "They couldn't afford the junk from eBay -- and they definitely couldn't afford the motorcycle," Winget says.
Personal finance experts say pride can get consumers into debt and prevent them from seeking help. That was the case with Tiffany Black, a New Yorker who says that when she was a broke college student, she was too proud to ask her family for help paying for textbooks, food, clothes, utilities -- even plane tickets home for the holidays. "I'd just charge it on my credit card. I wanted to feel like I was fine, like I could make it on my own," says Black, who had 12 credit cards and, at one point, owed $27,000. "If I had asked for help back then or just admitted I couldn't afford certain things, I probably wouldn't be in credit card debt."
Pride also is a top reason consumers in financial trouble don't seek help from the lender or a financial professional, says Cunningham. "People are very reluctant to discuss financial distress -- they think, 'I can resolve this on my own,'" she says. "But delay only makes the problem more difficult to resolve -- the sooner people can reach out for help, the better off they'll be."
The key to deliverance from all the seven deadly credit card sins, experts say, is to take an honest look at your behavior around credit cards -- and your motivation. "Money problems are never just about the money, there's always an underlying issue," Rhode says. "Taking a moment to be self-aware is the single most powerful tool you can use to break the cycle of debt."
See related: Q&A: Avis Cardella writes on overcoming shopping addiction, Home-shopping channel addiction: A fast path to credit card debt, Careless-spending celebrities lose sympathy with American public, Credit sin: Does credit save or condemn you?, Credit card revenge spending, 7 ways to protect against being a victim of credit card revenge
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