NEW YORK (MainStreet) — Margarita Gilo has paid $7,000 toward her student loan debt since graduating from Niagara University’s College of Hospitality & Tourism Management in 2008. But she's maintained this regimen, in part, by not spending profligately on her credit card.
The 29-year-old recently secured the position of club house manager at the Isleworth Golf & Country Club in Windermere, Fla. but still she keeps a credit card that has a $1,500 limit.
“I use my credit card for small monthly expenses so that I don’t have to use my debit card,” Gilo said. “I do it for security purposes, because using my debit card isn’t safe.”
Unlike Gilo, some 60% of women carry a balance on their credit cards and the average credit card debt is $11,486, according to NextAdvisor. Only 55% of men, slightly smaller proportion, carry a credit card balance.
“The ease with which plastic can purchase that 'feel-good' experience is an immense anxiety reducer in the moment, and the power of the need to reduce anxious feelings -- of being inferior, looking less attractive or worthy compared to the next person -- is immeasurable,” said Dr. Jeannette Raymond, a licensed psychologist with a counseling practice in Los Angeles.
Women, Raymond argues, may be more inclined to spend willy-nilly with their credit cards in order to provide for their families -- fulfilling their evolutionary instinct to tend to hearth and home.
"Women in general don't feel that their spending is frivolous," said Dr. Raymond. "Where women see their children as extensions of themselves, they will splurge on their clothing, toys and bedroom furniture just to bask in the mirror that is their child."
Because many women do not pay off their credit cards each month, some experts say it’s best to operate on a cash basis.
“If you opt to use debit or cash, you are forced to spend only what you have available, which hedges against any risk of overspending that is less likely to result in you over-extending your budget,” said Leslie Tayne, a Long Island-based financial attorney and debt specialist. “With a credit card, you have a larger limit of how much you can spend, which can result in an impulse purchase.”
That’s because thinking about saving for retirement isn't nearly as satisfying as proving status or soothing an uncomfortable feeling.
“Spending by women is often an act of competition with others in their social group,” Dr. Raymond told MainStreet. “It’s either about competing with other mothers in the school neighborhood or with the wives of their men.”
Erica McCain, author of Ladies With Loot (McCain & Associates 2014), advises women to pick up a pair of scissors and cut up their credit cards.
“Err on the safe side of your finances,” said McCain. “If you’re enjoying a lifestyle of liberal spending because of a great income, realize much of that stream can drastically slow due to an unforeseen life event.”
Warning signs that credit cards are not being managed properly include charging to take advantage of rewards, only being able to afford to pay monthly minimums, participating in impulse shopping and not having an emergency fund.
“If you’re using a credit card for emergencies, it can lead to larger debt that becomes even more inflated by accruing high interest,” Tayne told MainStreet.
--Written for MainStreet by Juliette Fairley