Are you a conscious spender? Do you pay your credit card bill on time? Are you working towards improving your credit score? Perhaps you feel you do not even need help with credit card debt. Yet you still have credit card debt for some inexplicable reason.
Today I wanted to brush upon a common cause for credit card debt- free money syndrome.
No I’m not talking about when you swipe your credit card and it feels like “free money.” I’m referring to the times you decide to use your credit card for a group purchase and end up spending the money because it feels like free money in your pocket.
Cause of Credit Card Debt:
You go for dinner with a bunch of friends. Instead of splitting the bill 6 ways you decide to put it on your credit card (to help build your credit score of course). Everything seems to be going on track until you get your credit card bill and you realize you owe hundreds of dollars.
What went wrong? Instead of depositing the money into your credit card account, you accepted it as “free money.” You can’t go running after your friends for the money back because YOU have spent it.
Help with credit card debt reduction:
1. Make sure everyone pays their FULL amount. I stress the word full here. We all know that clown that buys a $14.99 meal and then chips in only $15 to the group bill. Did you forget about the tip buddy? What about taxes?
2. Deposit the money to the bank ASAP. Get your butt to the bank the next morning or the next possible opportunity. Get the money out of your hands. Deposit the money at the bank towards your credit card before you find yourself looking for help with credit card debt.
3. Try to avoid covering the group bill with your credit card when there will be heavy drinking. I know you want to build your credit rating and slowly improve your credit limit but let’s be honest here. The last thing you need in your pocket when drinking all night is a bunch of cash. Sure building your credit score should be a priority in your 20s but if you are out with friends then have fun and don’t worry about having to carry cash around the whole night.
4. Remember- this is not “free money.” The reason you have this money in your pocket is because you covered the purchase for the group with your credit card. This money is not yours. It is money that you borrowed from the credit card company to pay for the group meal.
5. Look over your credit card bill. Before you start seeking help with credit card debt make sure that you go over your bill to see where you went wrong. I know it sucks realizing you made a mistake but it beats lying to yourself.
Have you ever acquired credit card debt through strange reasons? If so, please share with us!
{ 5 comments… read them below or add one }
One bad habit I used to have when it came to credit cards was convenience. Rather than having to pull out and count the cash I would just pick out the card and hand it over (ya I know… lazy). This in itself wasn’t necessarily the problem but many times while in college I would only pay the minimum rather than paying off the card so it would just keep accruing.
Luckily I started controlling that habit awhile ago.
@Edwin All that matters is that you eliminated the problem as soon as you noticed it was affecting you. Believe me I do agree with you because in the past I have opted to use my credit card when I clearly shouldn’t have. It goes to show you the power of convenience.
I have never thought of this scenario in this way but I definitely see how this could easily happen. It’s also important to resist the temptation to want to “show off” and always try to pay for the entire group’s meal.
I can’t say that I’ve ever run into this particular problem, but I can see how it would happen. I’ll definitely be sure to get money from my fellow diners before I put the meal on my card (unless I do intend to treat them to dinner).
@Roger Feel free to treat me any time lol.