SOCIAL PSYCHOLOGY OF CREDIT

WHY DO WE USE CREDIT? Convenience Safety To track purchases Instant or spontaneous purchases Gifts To pay other bills

To maintain and improve your lifestyle!

Four types of Spending NEED“I need” EGO“I desire” IMPULSE“I want” GUILT“I have to”

Purchasing Behavior EVENTS “hard times” or “good times” VALUES “What is important” ATTITUDES

EVENTS 1930’s The Great Depression 1940’s World War II 1950’s The Good Times 1960’s Turbulent 60”s “Sock it to me, Baby” 1970’s “Misery Index” 1980’s Prosperity 1990’s Tech Bubble Bursts 2000’s Corporate Greed

1930’s1940’s1950’s1960’s CautiousConflictRelaxedHigh Expectations “Depression Mentality” “Secure” “Material” “I need”“I want” “I deserve”

1970’s1980’s1990”s2000’s ShockConfidentShockBlindsided “Confused”“Optimistic”“Over confient” “Reality Check” “I need”“I deserve” “I deserve” to “I need”

1930’s 1940’s 1970’s 1980’s 1960’s 1950’s 1990’s CREDIT USAGE

Homes Autos Investments Department Stores Loans Small Business Unsecured Credit Home Equity Loans Consumer Credit- Online, food, etc.

Average Number of Credit Cards

DANGERS!!!!! OVER USE!!!

Average credit card debt per household with credit card debt: $16,007* Total credit cards in circulation in U.S: million, as of yearend 2009 (Source: Nilson Report, February 2010) Total debit cards in circulation in U.S: 507 million, as of yearend 2009 (Source: Nilson Report, February 2010) Average number of credit cards held by cardholders: 3.5, as of year end 2008 (Source: "The Survey of Consumer Payment Choice," Federal Reserve Bank of Boston, January 2010) Total U.S. revolving debt (98 percent of which is made up of credit card debt): $864.4 billion, as of January 2010 (Source: Federal Reserve's G.19 report on consumer credit, March 2010) Total U.S. consumer debt: $2.46 trillion, as of January 2010 (Source: Federal Reserve's G.19 report on consumer credit, March 2010) U.S. credit card 60-day delinquency rate: 4.5 percent. (Source: Fitch Ratings, March 2010) U.S. credit card default rate: percent. (Source: Fitch Ratings, March 2010)

PSYCHOLOGY OF AFFLUENCE More, More, More ENTITLEMENT Credit is a birthright We are INDESTRUCTABLE SELF-FULFILLMENT

BEWARE Credit as Income $ = 0 Credit = $2000 THE MEDIA BUY! BUY! BUY!

AVOID: Instant Gratification Impulse Purchasing “How much is it? Vs “How much are the payments?”

BEWARE OF PURCHASING OVERINDULGENCE (“Grown Up Toys”) Fancy CarsExpensive Electronics High Fashion Clothing and Jewelry Luxury Items Boats, Condos, Timeshares Trendy Vacations