Some sneaky ways your credit card is making you spend more
Banks know that you would spend more with a card than cash.
Credit cards and cashless payment have revolutionized the way we shop. Credit cards have started taking over the way we spend our money. Most of the credit card companies do claim that their cards are making your dreams come true, their power in your pocket, and now, you can buy anything that you desire. Most of it is no doubt true, but you must understand one thing that banks run on profits and money. And what would bring profit to banks if you overspend and revolve more debt. They are constantly making you spend more. How you may ask? Have a look at the following points.
Offering add-on credit cards.
Your bank very smartly would offer a complimentary add-on card. Now, what these cards do is make you spend more (or make your spouse spend more). Now they don’t have just one cardholder who is spending; they have two. And revolving debt meaning bank earns more.
Increasing your card limit.
Congrats! Your card limit has increased; these words sometimes feel like an achievement. But in reality, it is the card company and bank that is getting more out of the deal. Banks thrive on the human psychology that says that if you find you are entitled to more money, you will spend more. But they don’t increase card limit of just any customer; they very smartly do it to paying customer who is regularly clearing its due. This way, the customer would be encouraged to spend more and, in return, pay more to the bank.
Offers on EMI’s.
Have you realized that now even the smallest of thing can be brought on EMI’s, not just house, car or any luxury goods but something as small as Manga comic set can be brought through EMI? On the face of it seems that banks are helping you realize your dreams easily,but in reality, sneakily, the bank is making shopping more lucrative. You would also have come across zero interest EMI options on certain credit cards. Banks want to encourage you to use your credit card more often.
The threat of downgrade.
As there is a reward of spending more and paying your dues timely, there is also a threat of downgrade if suddenly your conscience went to detox and you stopped using a credit card. This also is one of the clever ways bank want you to keeping using the card and keep spending more.
So, it is important to know the pros and cons and prudently use your credit card.