In today's digital age, everyone is using credit cards extensively. Furthermore, some people seem completely lost in the cashback and reward points associated with these cards. This is because credit card cashback and reward points are no longer just advertising or promotional offers; they have become part of modern shopping psychology. So, let's explore how cashback motivates us to spend more.

1. The allure of "free" things has become a problem.
Some psychologists believe that when we spend physical cash, our brain experiences a real pain. In contrast, when we use a credit card, this pain seems to be somewhat lessened. Furthermore, the allure of "cashback" releases a chemical called dopamine in our brain; this makes you feel like you're getting some extra money.

2. Understand the minimum spend requirement
On the other hand, most credit cards offer customers a cashback of ₹500 on a total purchase of ₹50,000. But in the name of saving ₹500, you often lose much more than that. Sometimes, this loss can even reach ₹1,500. For example, if your actual need is only ₹3,000, you may start buying things worth ₹2,000 without any serious thought just to get ₹500 cashback. You often realize the big mistake you made later.

3. The fear of 'missing out'
Furthermore, limited-time offers rarely give you the opportunity to delve into the details or think long and hard. This creates a sense of urgency; we feel that if we don't buy the item immediately, we'll lose the cashback entirely. In our haste, we end up buying things we don't need at all. We often overlook this fact.

4. Bad luck with credit card debt?

The true danger of cashback gradually becomes apparent when, in pursuit of rewards, we end up spending beyond our budget. For example, if you fail to pay your credit card bill in full at the end of the month, the bank charges interest at a rate of 36% to 45% per annum. In such a situation, even if you earn 2% or 5% cashback, the cashback becomes completely useless in the face of such high interest rates, and its value becomes virtually zero.

How to protect yourself from this trap?
To avoid this dangerous cashback trap, think carefully before making any purchase. Furthermore, never forget to create a shopping list before purchasing anything. Cashback can be a great option, but it must be used wisely.

PC:Navarastra