How to Trick Yourself Into Better Credit Card Behavior

By Emily Guy Birken. Last updated 8 July 2014. 4 comments
Photo: thisisbossi

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When my mother was in her early 20s, she had a phobia about driving over bridges. She decided to conquer her fear by driving across the Chesapeake Bay Bridge-Tunnel, which spans 23 miles total, 12 of which are the type of trestle bridge that made Mom nervous.

Before she jumped in the car and got along her phobia-conquering way, Mom did two things to make sure she would return triumphant, rather than just lose her nerve before crossing the bridge. First, she called and made a reservation at a posh hotel in Ocean City, Maryland, so that she had something to look forward to as she kept her hands in a death grip on the 10 and 2 o'clock position on the steering wheel. Then, she called all of her friends and let them know she was spending the weekend at the beach, so that she would feel terribly embarrassed if she chickened out.

As it turns out, my mother's methods for conquering her bridge phobia are what behavioral economists would call "pre-commitment mechanisms." These are strategies that can be used to ensure that we make the decisions that are in our best interests, rather than falling victim to temptation. In my mother's case, it was tempting to turn back before she got to the bridge, but by giving herself both positive and negative motivations prior to that moment of temptation, she was able to force herself to do what she really wanted — overcome her fear. (See also: But I Don't Want To! Secrets to Self-Motivation)

Pre-commitment mechanisms are the little tricks we use to keep ourselves on task. Anytime you schedule workouts with your best friend, create mini-deadlines for yourself for a large project, or download software that makes it impossible for you to check your email except at pre-determined times, you are using pre-commitment mechanisms.

Understanding Pre-Commitment and Our Irrational Brains

You may subconsciously realize that pre-committing to good behavior helps you to avoid procrastination, spending, bridge-avoidance, and the Rocky Road in the freezer, but you may not know why it works.

The answer lies in they way our psyche is set up. We have two parts to our mental makeup: an analytical and rational part that makes the best decisions for the long term, and the impulsive and emotional part that loves instant gratification and damn the consequences. Psychologist Jonathan Haidt described these two parts as the rider and the elephant in his book "The Happiness Hypothesis." (Dan and Chip Heath used that metaphor with Haidt's permission is the much more famous book "Switch: How to Change Things When Change Is Hard.")

Basically, our long-term thinking, analyzing, and planning is taken care of by the rider atop the elephant. It is the rider who decides to lose 20 pounds or stick to our budget. The elephant, on the other hand, is governed by emotion, impulse, and habit. Without the rider, the elephant would simply indulge in anything it wants.

The problem arises when there is a struggle between what the rider and the elephant each want. While the rider can direct the elephant where to go, it is so much smaller and less powerful than the elephant that the rider will eventually get exhausted. This is what happens when you successfully avoid the birthday cake at the office party, only to find yourself eating Oreos by the bag full when you get home — you've exhausted the rider by using willpower to keep the elephant at bay for the party, so you've got nothing left to fight it with when the cookies start calling your name.

Pre-commitment strategies are a way to avoid that struggle between rider and elephant. Placing both rewards and consequences on ourselves ahead of time makes it easier to have the elephant's wants fall in line with the rider's wants. Our riders may truly want to improve our spending habits or fit back into our wedding clothes, but we have to convince the elephant, too. Pre-commitment mechanisms are a way to do so.

Types of Pre-Commitment Mechanisms and Why They Work

There are three aspects of the elephant's makeup that you must appeal to in order to get it in line with the rider: emotion, instant gratification, and fear of loss. Knowing that your elephant is emotional, focused on the now, and fears loss allows you to make pre-commitments that will use those characteristics to your advantage. Here's how.

Using Emotion

One of the best ways to utilize the emotions of the elephant is to change social consequences in response to future choices. This is what my mother did by telling all of her friends that she was going to the beach. She knew that she would feel embarrassed and ashamed of herself if she had to admit that she had bagged the trip, so the social consequences were stronger for her elephant than her fear.

This is also why so many successful budgeters have blogged about their journey out of debt. Normally, we would think of financial decisions as being fairly private, but these individuals share their money choices with the entire world — and that helps them to stay on track. The negative social consequences of reneging on the publicly stated goals are much stronger than the immediate temptation to spend.

This is one of the reasons why groups like Alcoholics Anonymous work to help people with addictive behavior — it creates a serious social consequence for falling off the wagon. The fear of having to go back to day one of sobriety in front of your group after months or years of success can be stronger than the temptation to drink.

Making Instant Gratification Work for You

Since the elephant is most concerned about what is happening in the now, it can be difficult to convince it that the long-term goal is more important than the immediate gratification. To do so, we must find a way to increase the immediate payoff of the long-term goal.

This is actually easier than it sounds. There is a reason why weight loss programs encourage you to celebrate every pound lost. You may be on a 50-pound odyssey of weight loss, but enjoying the triumph of small achievements within your larger plans means that you are giving the elephant something to enjoy during the long slog.

This is also the psychology behind the famed debt snowball that Dave Ramsey recommends for debt payoff. While it would make more financial sense to pay off your debts in the order of highest to lowest interest, that could get awfully boring for your “I want it NOW!” elephant. By paying off your debts from the smallest balance to the biggest, you get to tackle your enormous goal of debt reduction while still giving your elephant some instant gratification. Without that payoff of seeing debts blown away, the elephant might be tempted to run up the credit card again.

Reframe the Felt Losses

The elephant hates loss, so finding a way to change how loss is felt in future decisions will really motivate the elephant. This psychological quirk is called loss aversion, and it means that we are programmed to work harder to avoid a loss than we are to earn a gain.

For example, some of the most motivating weight loss systems ask participants to deposit a sum of money in an account before they begin their diet program. If the participant does not lose a pre-determined amount of weight before the end of the program, they forfeit their money. If they meet their goal, their cash is returned to them. Since losing that cash feels painful, it is easier to make decisions in line with the weight loss goals, rather than give in to temptation.

On the other side of the felt loss coin is removing the sense of loss. You can accomplish this by doing such things as making your contribution to savings or retirement accounts automatic on the day of your paycheck. If you never see the money in your account, you don't feel the loss of it, like you would if you had to manually transfer the money.

Removing the sense of loss is why gym memberships and data plans want you to pay monthly and automatically — you don't think about how much you are spending each time you use their service, which is good for them and bad for your wallet.

Pre-Commitment Mechanisms and Credit Cards

So knowing all of this about the rider and the elephant, it is possible to entirely change your credit card behaviors by instituting pre-commitments. Here is a sampling of credit card pre-commitment mechanisms you could set up in order to improve your spending habits.

1. Use Your Social Network to Hold You Accountable

Whether you tell everyone you know that you're trying to rein in the credit card spending or you start blogging about your struggles with overspending, letting everyone in your circle know that you are trying to change your ways gives you an emotional reason — embarrassment — to abstain.

2. Set Up a Credit Card Alert — That Goes to Your Spouse

Many credit card companies and banks offer automated alert systems that will email or text you when your available credit dips below a certain amount or when a large transaction has been charged. This information is very helpful for the cardholder, but it can be an even better motivator if you choose to also send it to your spouse. For example, you might find yourself looking longingly at a gorgeous pair of Manolo Blahniks and itching to pull out your credit card. But since you and your husband have decided to use card alerts as a pre-commitment, you know your husband would immediately know about the purchase, so you're more likely to keep on walking and find a way to save up for the shoes rather than put them on credit.

3. Give Yourself a Sticker on the Calendar Every Day You Avoid Spending Temptations

Stickers really aren't just for kids. Pick out a design you like, whether it's old-fashioned gold stars or your favorite Simpson characters, and place one on each day of the calendar you meet your credit card (non) spending goals. Not only is there a psychological boost from the immediacy of the reward, but once you have a streak going, you will be invested in continuing it.

4. Plan Out Rewards for Good Behavior

Decide ahead of time on some things you will treat yourself to for every week you don't use your credit card. (This can be a little tricky, as these rewards need to be either free or very low cost in order to not defeat the entire purpose of the pre-commitment.) However, once you have come up with some rewards for your good credit card behavior, write them into your calendar to look forward to. This will not only give your elephant some instant gratification, it will also trigger loss aversion, as you won't want to mess up and lose out on your treat.

Some suggestions for free or low cost treats: a nap in the middle of the day, a RedBox film you've been looking forward to watching, an afternoon at the library (OK, maybe that one's just a treat for me), a hot bath, or a day off from chores. You'll be so looking forward to your reward, it will make the spending temptations much less interesting.

5. Plan to Volunteer for a Charity You Hate If You Don't Meet Your Goals

You need to feel the loss that irresponsible credit card behavior will bring about, but it is difficult to do that in the moment — or to even think about the balance long term. One way to make sure that you feel the loss is to tie it to another behavior. In this case, you could pre-commit to volunteering your time (since pre-committing to losing money would be counter-productive) to a hated charity. This will give you a consistent motivator to keep you on track.

6. Use Programs Like Quicken or Mint to Tell You How Much You Are Spending

Credit is dangerous because it doesn't feel like real money. The sense of loss is removed from the act of purchasing. Having the information sent to you daily about your balance, the amount you're paying in interest, and the amount of time it will take you to pay off your credit cards will help you to feel the loss in the moment. This regular reminder will motivate your elephant to ignore spending temptations.

The Bottom Line

Coming up with tricks to control our own behavior is weird, irrational…and effective. We may think that we should be able to just act within our own best interests at all times, but that is simply not the case. Instead, we need to plan ahead for our moments of weakness. Pre-commitments allow us to make the choices we really want before temptation is staring us in the face.

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Greg Go's picture
Greg Go

"While the rider can direct the elephant where to go, it is so much smaller and less powerful than the elephant that the rider will eventually get exhausted."

It reminds me of a NYT article about decision fatigue:

This idea is so interesting and powerful. When we put off important decisions until the afternoon or evening (like say, when we have a late meeting or go shopping after work), we make poor decisions because we've already exhausted all our decision-making juice for the day.

It may not be reasonable to avoid all such end-of-day decisions, but I am now more aware of my poor decision making process at the end of the day. This awareness, plus your tips for managing the elephant, will help keep my rider fresh and making good decisions. :)


Guest's picture

I honestly don't know if I can be helped, and i barely have a problem. I'm definitely not an addict but I would be lying if I say the sales don't get me a lot of times. I'm not keen about letting other people know how I'm spending, but the online programs sound like a good idea.

Guest's picture

This might be stating the obvious, but when you do reward yourself for good credit card behavior, just be sure that you aren't rewarding yourself with something expensive that just negates all the work you've done to reduce your debt.

Guest's picture

These tips are great. Most of the tips offered in this article involve other people and positive behaviors, this is critical. Personal Finance shouldn't be personal especially if you are having troubles managing your credit card use. I particularity like the loss aversion method, setting aside a sum of money to encourage better credit card use.