ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Credit cards make it all too easy to overspend. Buying on credit can also make your purchases more expensive, considering the interest you may pay on them. Getting into too much debt can not only hurt your credit score but also strain relationships with family and friends.

Detailed explanation-2: -A high account balance also has the potential to lower your credit score, which may make it more difficult to secure additional credit. Overspending can also have personal and social consequences. Carrying debt can contribute to stress and anxiety, affecting your relationships and mental health.

Detailed explanation-3: -With credit cards, there’s such a disconnect between making purchases and actually paying for them that you hardly even realize you’re spending money. You don’t feel the pain of the purchase the way you would if you were using cash, which is one of the reasons that people tend to overspend with credit cards.

Detailed explanation-4: -The long-held idea that credit cards encourage overspending isn’t necessarily false. A journal article by University of Toronto Researcher Dilip Soman found that those who have a history of using credit cards as a form of payment tend to overspend more than those who have a history paying with cash or checks.

Detailed explanation-5: -Risk of Getting Into Debt Any time you borrow money, you’re creating debt. The more you borrow, without repaying, the deeper you go into debt. Debt leads to a myriad of other problems, and not all of them are financial. It can lead to stress, depression, and other health issues, all of which can have serious impacts.