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Are you in a money fog? The psychology of money and credit cards.

By , CardRatings contributor
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Are you in a money fog? The psychology of money and credit cards.

Karen McCall is a nationally recognized consultant, trainer, and speaker on effective money management and its role in overall financial and emotional stability. She is also founder and owner of the Financial Recovery Institutesm. Karen was recently approached regarding how psychology and consumer attitudes affect our use of credit cards.

Can you elaborate on how psychology and underlying consumer attitudes affect our use of credit cards?

Money behaviors (including use of credit cards) and psychology cannot be separated because money is where our emotions and behaviors connect. Today there are many, many people who are simply not living to their fullest potential because they either can't, don't, or won't make effective money decisions on a daily basis. Most people with money issues are in a fog about money. They need to see their financial lives clearly and embrace a process for making effective money choices.

I've also seen many situations where a person who is depressed or angry uses retail therapy to feel better. Again, this behavior offers short-lived relief, followed by remorse and guilt, which can start the cycle all over again.


What do you find as the psychological difference between using cash as opposed to credit card?

So many people are in a money fog, and using plastic--even debit cards--can be a way to stay in the fog. If you are using cold hard cash there is a lot more connection to your money.

However, simply switching to using cash isn't necessarily the remedy. How many times have you taken $100 from the ATM and had no idea later where it went? The real key is to track the cash you are spending. When I was counseling clients, l had all of them carry cash trackers so they could write down what they were spending their cash on, and without question, all of them found the tracking process helped them begin making clearer financial decisions.

Is there anything you would like to add?

What really is important for people who want to overcome their financial challenges is that they approach it from a holistic perspective that integrates the practical, emotional, and spiritual aspects of financial issues. In the financial recovery process clients are supported and empowered to shed self-defeating money behaviors, while developing strong money management skills at the same time. Then they can build lives on a solid financial foundation rather than the shaky foundation that's created when people live in a house of cards, so to speak.

I've been fortunate to have the most satisfying career, first working with individuals and couples from all walks of life to help them transform their relationships with money, and now training Financial Recovery Counselors who do the same. Speaking from my own experience, as someone who was nearly homeless and deeply in debt just a couple of decades ago, I can say without a doubt that when your relationship with money is healthy, the quality of every aspect of your life improves.

I would like to thank Karen for her times and insights. This is a fascinating subject that I think gets very little exposure. Would love to get your comments on our active credit card forum about how our minds and money are intertwined. I can't help but think that a lot of our nation's credit card debt could be avoided if this topic was addressed more often.

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