Vance P. Truman, Attorney at Law
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Post-bankruptcy: Cultivating a new attitude about credit card use

For most of us, debt problems begin with credit cards. If we lose our jobs or have a health problem or get divorced, we turn to our credit cards "just temporarily."

But "just temporarily" stretches on, and before we know it we have racked up our maximum load, with no way to pay our monthly bill. The credit card company then raises our rates, and before you know it - it's over.

Is there a way to start over again, without this attitude of "charge it"? A recent New York Times article suggested a new mindset that may be helpful for some of us: "A Little Nagging Can Help Reduce Credit Card Debt."

The article details a study by the Urban Institute and the D2D Fund. The study sought to learn if a little nagging - in the form of email reminders, banners from their bank, and refrigerator magnets! -- might cut down on impulse charging.

The rules of the study

The study required that two rules be followed:

1. Participants had to pay with cash, not credit, for purchases under $20.

2. Participants were frequently reminded why credit was less painful, but a worse deal financially, after interest charges and fees are tacked on.

Reminders took the form of little slogans: "Don't swipe the small stuff. Use cash when it's under $20." And, "Credit keeps charging. It adds approximately 20 percent to the total."

See how this is nagging? The test wouldn't let participants forget that credit is not your friend.

The results suggested that this kind of automatic nagging is motivating for some people, in some situations, but not for everyone. Of the two rules listed above, people who made all under $20 purchases with cash, spent about 2 percent less money. Good, but not great.

But the second slogan, reminding you that credit card costs keep mounting, did strike a nerve, especially with young people.

The power of positive nagging

The nagging idea also seemed to work better with recurring or frequent purchases, like groceries, rather than those people make over the course of years, like medical bills, cars, or mortgage payments. Unfortunately, people make more of these major payments today using plastic.

What does this research tell us? People are somewhat susceptible to friendly reminders that credit cards get us into trouble - despite seeming painless at the time. But there is a limit to this susceptibility, because - and this should not come as a surprise - not many of us like being nagged.

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