Unrealistic optimism and people's choice of credit card

Gemmzie

From the British Psychology Society...

Given their high interest rates, why do so many people continue to borrow money on credit cards? According to Sha Yang and colleagues, part of the answer has to do with people being unrealistically optimistic about paying off their balance each month.

Two hundred and seventy-one credit card users were surveyed repeatedly about the cards they used, their intention to pay off their monthly balances, and what their actual credit balances were.

From a pragmatic perspective, people who allow debt to accumulate on a card would be better off using a card with a cheap interest rate, even if the annual fee were large. However, the researchers found that people who said they intended to pay off their balance, but didn't, were more likely to use cards with higher interest rates, and less likely to use cards with a higher (one-off) annual fee.

The researchers said: "These findings show that people who are more subject to unrealistic optimism will be more prone to select cards that do not serve their interests".

A second study involved 75 participants who made hypothetical choices between rival credit cards and also completed a questionnaire that revealed their propensity for wishful thinking. Consistent with the first study, people prone to wishful thinking were less bothered by a high interest rate, but more concerned with a avoiding a higher annual fee.
"We show that unrealistic optimism may be one of the psychological explanations underlying why some consumers prefer credit cards with features that are not in their best interest, which has long been a puzzle for both
researchers and credit card marketers", the researchers said, adding that public policy may be needed to protect such people.




I thought it was interesting, and very relevant to many DFWs I'm sure

misspoppy

very interesting I'm sure many of us relate to the thought process.

southernscouser

Anyone else on here gonna start using Sha Yang as a saying for sexual inuendo?

You wanna Sha Yang? :cool: :rotfl:

elantan

ss trust you ...lol

Snaggles

:rotfl: I wont be able to resist asking hubby if he fancies a Sha Yang tonight!!!

The article is so true though, many a time I have fully intended to pay my card off in full but then life gets in the way and I end up paying the minimum.

southernscouser

Snaggles wrote: »

:rotfl: I wont be able to resist asking hubby if he fancies a Sha Yang tonight!!!

I'm not sure whether I should feel flattered or scared that you will be thinking of me when propositioning your OH for baby making duties! :think:

Penny2myName

I find it very apt considering I have just applied for a card with an extortionate apr, only reason I have had to apply for it is because the main things i pay for on-line (rent, book club, asda shopping) don't accept my new card (visa electron Alliance & liecster)since switching accounts. My Halifax card was/is a visa debit, but since I am after my charges back at the moment and how well known Halifax are for closing your account once you have them, I don't know how much longer I am going to have a visa debit.

Snaggles

southernscouser wrote: »

I'm not sure whether I should feel flattered or scared that you will be thinking of me when propositioning your OH for baby making duties! :think:

Hahaha, it's a bit late for baby making! In fact, I tried to point out to hubby that whilst I'm pregnant, 'bedroom activities' have no real biological use, but he seemed to think it was just an excuse...... :cool:

Edit: Scared????? Cheeky boy!! :rotfl: