What makes people unhappy with their credit cards?  Surprisingly, it’s not the interest charges.  This paper finds that what causes people stress and dissatisfaction with their credit cards has to do with how they use the cards more than how much the cards actually wind up costing.  Being late on payments, carrying a balance (regardless of the size of that balance), going over their borrowing limit, getting cash advances, and using the card even when there is no need to do so are the factors that cause some people to be unhappy with their cards.  Another key finding of this paper is that these factors bring dissatisfaction only to those who are risk averse.

This is useful to financial counselors and planners because it suggests that showing a client the financial costs of credit card overuse and mismanagement is unlikely to be effective at motivating change in behaviors for clients.  Rather, this study suggests that planners and counselors should point out to their clients how improving their credit card usage can relieve the stress of late notices and other unpleasant notifications from the credit card company.

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Download the research (available to AFCPE members or by request from the authors): Patrick Payne, Charlene M. Kalenkoski, and Christopher Browning, “Risk Tolerance and the Financial Satisfaction of Credit Card Users,” JFCP, Vol 30(1)

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