Credit cards are extremely convenient, helping you manage your cash flow, build your credit history, and enjoy various rewards and benefits. However, credit cards can also tempt you to spend more than you can afford, especially on impulse purchases that you may regret later. 

Impulse purchases are unplanned and spontaneous buying decisions that are driven by emotions, habits, or external influences. They can range from small items like candy bars or magazines to big-ticket items like cars or vacations.  

So why do we make impulse purchases? What are the psychological factors that influence our credit card spending behavior? And how can we avoid falling into the trap of impulse buying? In this blog post, we will explore these questions and provide some practical tips to help you control your credit card spending and save more money. 

Why Do We Make Impulse Purchases? 

There are several psychological reasons why we make impulse purchases, such as: 

• Emotions: We often use shopping as a way to cope with negative emotions, such as stress, boredom, sadness, or anxiety. However, this feeling can quickly fade away and leave us with guilt, regret, or debt. On the other hand, positive emotions can also trigger impulse buying, such as joy, pride, or gratitude. We may feel like rewarding ourselves or celebrating an achievement or occasion by splurging on something we want. 
   

• A good deal: We are often attracted by discounts, sales, coupons, or other incentives that make us feel like we are getting a bargain or saving money. However, these offers can also create a sense of urgency or scarcity that prompts us to buy something we don’t really need or want. We may also fall victim to the sunk cost fallacy, which is the tendency to continue investing in something that has already cost us money or time.  
   
• The love of shopping: Some people simply enjoy shopping as a hobby, a social activity, or a form of entertainment. They may derive pleasure from browsing different products, comparing prices and features, trying on new clothes or accessories, or discovering new trends or brands.  
   

How Can We Avoid Impulse Purchases? 

Impulse buying can lead to overspending, debt accumulation, lower savings, reduced financial security, and increased stress. Therefore, it is important to learn how to avoid impulse purchases and develop healthier spending habits. Here are some tips to help you do that: 

• Make a budget and stick to it: A budget can help you control your spending and save more money for the things that matter most to you. To make a budget, you need to list all your sources of income and all your fixed and variable expenses. Then you need to subtract your expenses from your income and see how much money you have left over for saving or spending. Once you have a budget, you need to stick to it by reviewing it regularly and adjusting it as needed. 
   

• Delay your purchases: One of the best ways to avoid impulse purchases is to delay your buying decision and give yourself some time to think about it. You can use the 30-day rule, which is a technique of waiting for 30 days before buying something you want. You can also use the 10-second rule, which is a technique of counting to 10 before buying something you want. This way, you can pause and ask yourself some questions, such as: Do I really need this? Can I afford this? Is this worth the money? How will I feel about this later? 
   
• Avoid temptation: Another way to avoid impulse purchases is to avoid situations or environments that may tempt you to spend more than you need or want. For example, you can avoid going to shopping malls, browsing online shopping websites, watching TV commercials, reading magazines, or following social media influencers that promote products or services that you may be interested in. Instead, you can focus on other activities that bring you joy and fulfillment, such as hobbies, sports, reading, learning, volunteering, etc. 
   
• Set goals and rewards: Setting goals and rewards can help you stay motivated and focused on your financial well-being and long-term vision. You can set goals which are specific, measurable, achievable, relevant, and time-bound. For example, you can set a goal of saving ₹1,00,000 for an emergency fund in one year. Then you can break down your goal into smaller and more manageable steps, such as saving ₹8,333 per month or ₹1923 per week. You can also reward yourself for achieving your milestones or sticking to your budget by treating yourself to something small and affordable. However, make sure that your rewards are not counterproductive to your goals and that they fit within your budget. 

Conclusion 

Credit cards are powerful tools that can help you manage your money and enjoy various benefits and rewards. However, credit cards can also tempt you to make impulse purchases that can harm your financial well-being and long-term goals. Impulse purchases are driven by psychological factors such as emotions, past experiences, a good deal, or the love of shopping. By following the tips shared above, you can control your credit card spending and save more money for the things that matter most to you. 

If you are looking for a new or better credit card that suits your lifestyle and spending habits, you should check out the range of IndusInd Bank Credit Cards that offer exclusive benefits and rewards. Whether you are looking for cashback, rewards points, travel perks, dining discounts, entertainment offers, or more, IndusInd Bank has a card for you. You can apply online and get instant approval. To know more about IndusInd Bank Credit Cards and apply for one today, click the link below. 

Apply Now 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. 

If you have a credit card that you no longer use or need, you might be tempted to close it and get rid of it for good. However, before you do that, you should be aware of how closing a credit card account can affect your credit score and your overall financial health. 

Your credit score is a three-digit number that reflects your creditworthiness and is based on your credit history. It is calculated using various factors, such as your payment history, the amount of debt you owe, the length of your credit history, the types of credit you have, and the number of new credit inquiries you have made. 

Closing a credit card account can impact some of these factors and lower your credit score in the following ways: 
 

• It can increase your credit utilization ratio.  
  A credit utilization ratio is the percentage of your available credit that you are using. For example, if you have a total credit limit of ₹1 lakh across all your cards and you have a balance of ₹20,000, your credit utilization ratio is 20%. Ideally, you should keep this ratio below 30% to maintain a good credit score. When you close a credit card account, you reduce your total available credit and thereby increase your credit utilization ratio. This can hurt your score as it indicates that you are relying more on debt. 

• It can reduce your average age of accounts.  
  Your average age of accounts is the average length of time that you have had all your credit accounts open. It is calculated by adding up the ages of all your accounts and dividing by the number of accounts. For example, if you have three credit cards that you have had for 1 year, 3 years, and 5 years respectively, your average age of accounts is (1+3+5)/3 = 3 years. Generally, the longer your average age of accounts, the better your credit score as it shows that you have a long and stable credit history. When you close a credit card account, especially an old one, you lower your average age of accounts and potentially lower your score as well. 
   
• It can affect your credit mix.  
  Your credit mix is the diversity of credit types that you have, such as credit cards, personal loans, car loans, home loans, etc. Having a variety of credit types can boost your score as it demonstrates that you can handle different kinds of debt responsibly. When you close a credit card account, you reduce your credit mix and possibly reduce your score as well. 

However, closing a credit card account does not always have a negative impact on your credit score.

In some cases, it might even improve your score or have no effect at all. For instance: 
 

• If you have a high number of credit cards and closing one does not significantly affect your total available credit or average age of accounts, it might not hurt your score much. 
   
• If you have a low or zero balance on the card that you are closing and you continue to pay off your other balances in full and on time, it might not hurt your score much. 
   
• If you have a delinquent or defaulted account that is hurting your score and closing it helps you avoid further damage or fees, it might improve your score in the long run. 
   

Conclusion

Therefore, before you decide to close a credit card account, you should consider the pros and cons carefully and weigh them against your financial goals and situation. You should also check your current credit score and monitor it regularly to see how it changes over time. 

If you are looking for a new or better credit card that suits your lifestyle and spending habits, you should check out the range of IndusInd Bank Credit Cards that offer exclusive benefits and rewards. Whether you are looking for cashback, rewards points, travel perks, dining discounts, entertainment offers, or more, IndusInd Bank has a card for you. You can apply online and get instant approval.  To learn more about IndusInd Bank Credit Cards and apply for one today by clicking here. 

Apply Now 

Disclaimer: The information provided in this article is generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Hence, you are advised to consult your financial advisor before making any financial decision. IndusInd Bank Limited (IBL) does not influence the views of the author in any way. IBL and the author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information.