Money To Live

June 17, 2009

Now I understand credit card debt

Filed under: Uncategorized — by moneytolive @ 5:00 am

While I am still making job applications, I have a strong lead on a job and have some high-paying short-term contract work. I need somewhere to work quietly and without distractions for several hours a day.

Since I am bouncing around visiting with friends and family in various cities and states, I go to Starbucks and other coffee shops. I can be incredibly productive for 2-3 hours (research job apps, do some part time work); it only costs a few dollars to buy a drink or snack; and leaving the house gives my host some privacy.

Independent coffee shops frequently provide free internet, which I use. Starbucks provides free internet when a purchase is made using a gift card every 30 days. I put $20 on a Starbucks card in order to get the internet, and then I made a purchase with the card. Then I made another purchase. I realized after my second purchase with the card that I had no idea how much money I spent.

This never happens to me when I use credit cards.

This never happens to me when I use cash.

This never happens to me when I use a gift card that I received as a gift. (I have a Macy’s card from last Christmas. It is in my wallet, wrapped up in the receipt showing the remaining value.)

Starbucks has done something very well – they got me to ignore how much money I spend. Well, it is very good for Starbucks and potentially bad for me.

Maybe this happened because

  • I did not receive a receipt at either transaction.
  • I already parted with the $20 to buy the card – now it is “free” money. I still remember handing over a $20 bill when purchasing the card.

I love it when I have a new experience that gives insight into how other people feel or think. Before, I never understood how people could rack up credit card debt, but now I (at least partially) understand how someone can make a credit card purchase and not think about the cost.



  1. Interesting! Great post! 🙂

    Comment by Shannon — June 17, 2009 @ 5:32 pm |Reply

  2. I “use” cards for exactly that purpose sometimes. E.g. I have a bus card because I felt terrible seeing how much I was spending while unemployed, and the card hides that cost (at least from refill to refill). However, I am generally very conservative in my card collection because I hate the idea of unconscious people loaded up with unessential enviro-unfriendly plastic.

    Comment by Anita — June 18, 2009 @ 7:27 am |Reply

  3. Related (perhaps): when one shops in certain stores without caring a whit about the price of individual items and, even when ringing up the charges, remains oblivious to the total. That’s my behavior in bookstores. I have assumed that (a) after a lifetime of bookstore shopping I am comfortable with the range of prices there, and (b) the products have high value for me and I would be prepared to spend the same amount of money if I were actually aware of the dollars and cents. That’s not a defense, by the way. I wouldn’t advise the behavior for anyone, myself included. (I leave the store with receipt in hand but without any conscious attention. If anyone asked me what I just spent, I would have to say I didn’t know.) So, no defense. But a genuine interest in what makes us humans do things like that.

    Comment by Mary Bold — June 21, 2009 @ 3:42 am |Reply

  4. Katy, I’m late posting but wanted to add a comment. I have this problem with toll tags. Having that little sticker almost encourages me to drive more…because it feels free. So, sure I can go to the airport again (and again). I can drive to my favorite Central Grocery on the toll road…because I don’t hand over any money. While we waited 30+ minutes in a non-tolltag lane in San Francisco yesterday, I became even more fond of my own tag. It’s interesting how gift cards and toll tags contribute to “free spending.”

    Comment by Lillian — June 24, 2009 @ 6:45 pm |Reply

  5. That was a very good observation. I would second it by saying having a credit card linked to your Paypal account can lead to the same kind of behavior. I also noticed that people truly prone to this are also having a hard time negotiating credit card debt – they feel “guilty” for the expenses incurred and take the responsibility (which is good) but remain defenseless when it comes to asking for better terms and negotiating down their debt.

    Comment by Schuyler (Credit Card Debt) — August 17, 2009 @ 1:52 pm |Reply

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