In the era of contactless payments and instant transactions, the line between real income and available credit limits is becoming increasingly blurred. Financial experts warn: a credit card is a tool that can either help manage liquidity or lead to a debt trap. Taras Kozak, founder of the 'UNIVER' investment group, revealed in an interview with RBC-Ukraine the psychological mechanisms that cause people to overspend and explained why the 'ease' of withdrawing funds from a card is often deceptive.
The Psychology of 'Virtual' Money and the Grace Period Trap
The main problem for the modern consumer lies in the distorted perception of their own finances. Kozak notes that having a credit limit creates a false sense of financial solvency. When a person sees an available amount on a terminal screen or in a banking app, they tend to consider it their own resources, ignoring the fact that these are borrowed funds subject to repayment.
Particular danger is posed by the grace period. According to the expert, it creates the illusion that a person has more money than they can actually manage. While interest is not accruing, the consumer feels confident; however, if the debt is not repaid within this period, the situation changes drastically. The accrual of interest turns the credit into an expensive tool that begins to 'torment' the cardholder, increasing the financial burden.
The 'Financial Seesaw' Effect and Loss of Reserve
Using a credit limit often leads to a paradoxical situation, which Kozak calls 'financial seesaws.' Many people receive their salary, but a significant portion of it immediately goes towards repaying debts accumulated during the previous month. As a result, the actual disposable income turns out to be significantly less than the official salary amount.
Furthermore, constant use of the credit limit deprives a person of an important safety buffer. Kozak warns: if a person regularly 'loads' the card to the limit, in the event of unforeseen circumstances (crisis, illness, force majeure), they will have no available reserve. In such a situation, one has to take out a new loan with interest, which triggers a vicious cycle of increasing debt load.
The 24-Hour Rule and Capital Preservation Strategy
To combat impulsive spending, the expert suggests a simple but effective psychological technique — the '24-hour rule.' Before making a large purchase, it is recommended to set an alarm on your phone and forbid yourself from making the transaction for 24 hours. During this time, the emotional impulse fades, and a person can soberly assess the necessity of the purchase, often deciding to redirect funds to more important goals.
It is also critically important to form a financial safety cushion. Kozak advises against keeping reserve funds on the same card used for everyday purchases. It is better to use deposits or bonds (OVGZ). The mechanical complication of access to money (the need to wait for withdrawal from a deposit or sale of a security) creates a necessary pause that helps reduce the desire to make an unnecessary purchase.
