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Are you addicted to credit?

Sunday, April 13, 2008
Tempted by credit cards?

Key points

  • New Zealand is typical of the growth in credit card debt around the world
  • If you've got a store card or two, a Visa card, a Mastercard, an AmEx card, a petrol card, and one of those multi-purpose, all-in-one access cards, chances are you have a problem
  • As with any addiction, the first step towards recovery is to acknowledge there's a problem

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By Allison Tait
MSN NZ Money writer

Sure, you love the thrill of the purchase and flashing your plastic as much as the next person, but that doesn't mean you're out of control? You can stop anytime you want — right?

Do you ever buy something on credit that you probably wouldn't have bought with cash? How many times have you maxed out a credit card? Have you ever had to use one credit card to make the payment on another?

These are some of the questions on a survey currently being conducted by As the name suggests, the site is aimed at those who feel that they are dependent on their credit cards. The real question is: could this be you?

Take the last question on the survey: do you typically read your credit card statements?

Hands up if you've ever seen that little windowed envelope in the mailbox and filed it directly in the bin (probably for health reasons given the fact that the contents could give you a heart attack). Or maybe you've just tucked it behind the radio, telling yourself you'll look at it later. New Zealand is typical of the growth in credit card debt around the world. A report by the Victoria University of Wellington showed credit card debt increased from $1.5 billion dollars in 1996 to $3.6 billion dollars in 2005. Which suggests some have gone beyond moderation in their use of the magic plastic.

But how do you recognise if you have a problem — and what can you do about it?

I can stop anytime I want…

Firstly, let's talk about this addiction thing.

"Everyone engages in addictive behaviors to some extent because such things as eating, drinking, and sex are essential to survival and highly reinforcing," says G Alan Marlatt, PhD, director of the Addictive Behaviours Research Center at the University of Washington told Psychology Today in a recently updated article on the magazine's website. "We get immediate gratification from them and find them very hard to give up, indeed. That's a pretty good definition of addiction."

That's also a pretty good definition of credit cards. Instant gratification. See something you like? Ker-ching, swipe, sign and it's yours. The trouble is that credit card gratification is a bit like herpes — the gift that keeps on giving. For every dollar you spend, you'll be spending another 10, 12, 15, 17, up to 20 percent, depending on your card. reports that you should always shop around for the best deal – when it comes to credit cards. “Credit cards come with varying interest rates, fees, and rewards programmes. Take the time to select the credit card that best suits your circumstances,” the website says. “And know the interest rate you’re paying on your credit card.”

There is the option of transferring your debt to a credit card with a zero interest ‘honeymoon’ period. But making the most of a zero-interest period requires strict discipline – there's no point making the shift if you're only going to use the time to put more on the card. Instead, leave the card at home and concentrate on paying off as big a chunk of the debt as you possibly can. Some people will simply transfer the balance to another interest-free card at the end of the honeymoon period and continue.

But this assumes that they're closing down old accounts as they go — not hauling around four or five credit cards to tempt them into ever-increasing debt.

One sign of addiction, according to is a proliferation of cards in your wallet — if you've got a store card or two, a Visa card, a Mastercard, an AmEx card, a petrol card, and one of those multi-purpose, all-in-one access cards, chances are you have a problem.

According to Psychology Today, "everyday bad habits, compulsions, dependencies, and cravings clearly have something in common with heroin and cocaine addiction, in terms of their mechanisms and triggers".

Such as?

For starters, "the substance or activity that triggers them must initially cause feelings of pleasure and changes in emotion or mood".

Tick. Slapping down the plastic for that 'must-have' purchase.

Then there's the fact that "withdrawing the substance or activity causes painful withdrawal symptoms".

Tick. Being in such huge debt that you need to put your cards on ice and face up to living not only within your means but on a debt-recovery budget.

But there's more. According to Psychology Today, "Addictions cause repeated behavioral problems, take a lot of a person's time and energy, are openly sanctioned by the community, and are marked by a gradual obsession with the drug or behavior".

Tick, tick, tick. The person who pulls out a credit card even though they know that their current level of debt is crippling them and causing them sleepless nights.

12-step plan (or thereabouts)

As with any addiction, the first step towards recovery is to acknowledge there's a problem. This means, gulp, getting out your last six months worth of statements (assuming you haven't hidden them so well you can't find them), and reading them. All the way through. Like a blockbuster novel you can't put down.

Do you even know what interest rate you're paying? Have you had to pay late fees because you've missed payments in the past? Do you pay more than the minimum payment (hopefully you're answering yes to that one, or you may well be paying off your debt well into the next millennium)?

Switching to a lower-interest card may save you hundreds of dollars over the long term. It may also pay to consider consolidating all your debts into a personal or debt-consolidation loan at a lower interest rate. Visit for calculators and other tools to help you work out which might be the best approach for you. Or go to CANNEX to compare credit cards currently in the market.

Of course, none of these measures will do the least bit of good if you continue to use the card. And, as addicts of any substance from drugs to love to sex will tell you, the 'just say no' technique doesn't really cut it.

Over the years, there have been many suggestions for what to do with troublesome credit cards — freeze them (literally), give them to a good friend under strict instructions that they're not to come out unless it's an emergency (not defined as 'I need something to wear'), leave them at home when you go shopping. If debt is a real problem for you, most experts would recommend a simple remedy involving five minutes and a pair of scissors (this would be the cold turkey part of the cure).

Whichever way you choose to rehabilitate your dependency, be proud of the fact that you've recognised your problem and you're taking steps to fix it.

Don't expect overnight miracles. And just take it one day at a time.

Are you struggling with financial problems or debt? For 24 hour emotional support call Lifeline on 0800 543 354, or visit for self-help resources or to find a Lifeline Centre near you. Lifeline offers 24-hour counselling services.

User comments
All is not lost Stef...... get to your local library, head to the shelves on finanace, house buying, debt management etc, theres a huge selection of reading material that will inspire you and tell you how to get on top of your debt. Just pick up a couple a week, browse thru them, take on board what might work for you and START addressing the debt. You are lucky to be young enough to work your way out of the pile of debt and make life choices so that it doesn't happen again. Theres probably alot of people your age in this position, take a chance with the libray suggestion and gain control over the debt. Become one of the ones who gets thru it. Best Wishes.
im 20 years old, and $33,000 in debt, this is all consumerism. no student loans, nothing nessasary, just holidays, a crap car, shoes clothes, alcohol, bla bla bla. all the junk i didnt need. i try to cut my cards up, but i end up at the bank the next week paying $15 for a new card to be issued. i KNOW i have a problem but no matter what i do i can't stop. i have 2 mastercards, 2 visa's an instant finace loan, a westpac loan, a farmerscard and a few Fixed Installment agreements. im constantly getting mean reminders that my accounts over its limit and i struggle to come up with the money to pay the minimum. in the last two years, i have accumulated $29,546 in interest. thats nearly a deposit on a mortgage. im screwed for life.
Have a financial goal in mind to work towards such as an investment to put your money towards. If you are truly passionate about the goal, then this will help to put all your money into paying off your debt and go towards a goal. It worked for me. I really wanted a house to own, I had debt debt debt. I put every spare cent onto it the debt to clear it, cancelled my cards with the companies and before I knew it, I was approved for a home loan. I've never been more excited. Now I have that focus, there is no way I want to let myself go back to using credit cards and ticking everything I need up. I can get by without them until I have saved up the money again.