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Credit card debt takes toll on mental health

Kelly Dilworth

Carrying excess credit card debt isn’t just bad for your credit score; it can also take a toll on your mental health, according to a new study published in the Journal of Family and Economic Issues.

The study followed 8,500 individuals who took part in the National Survey of Families and Households in the late 1980s and early 1990s and found a significant link between credit card debt and symptoms of depression.

According to the study, people who carried card debt were much more likely to report depressive symptoms, such as low self worth and hopelessness. Cardholders nearing retirement were especially prone to feeling down. So were cardholders with low incomes and those who were either unmarried or divorced.

Credit card debt can negatively affect your mental health

The researchers theorize that card debt’s toxic effect may come down to the lack of control people feel they have over the debt they’ve accumulated — especially if they are carrying more debt than they can repay. “Whereas debt may help alleviate economic stress in the short-term, over the long-term, debt burdens may lead to economic stress and, thereby, decreased psychological well-being,” write study authors Lawrence M. Berger, J. Michael Collins and Laura Cuesta in the report

That’s especially true if you’re already feeling squeezed by other financial obligations and you use your card for everyday purchases that you can’t otherwise avoid. The high fees associated with card debt can also take a toll, write researchers, especially since revolving debt can quickly pile up if you only pay the minimum amount due.

Other types of debt, by contrast, don’t appear to affect people in the same way. For example, people with midterm debt, such as a car loan, or long-term debt, such as a student loan or mortgage, were no more likely to report feeling depressed than people who were debt-free, the study found.

According to the authors, that may be because people tend to see long-term debt, such as student loans, as an investment in their future. Credit card debt, by contrast, has short-term benefits, such as accumulating goods you wouldn’t otherwise be able to buy, but it’s less likely to provide long-term benefits, such as a richer quality of life.

“Individuals may experience optimism with regard to debt that will ‘pay off’ in the future through increased earnings or wealth acquisition (in the form of home equity), ” write the authors, “but experience psychological burden with regard to debt that does not contribute to asset or skill accumulation.”

Student loans and a bad mortgage can also put you in a tough spot if you become overextended, the authors concede. The questionnaires used in the study were conducted well before the Great Recession and people may have viewed mortgage debt and student loans differently back then.

However, card debt is still a much more expensive form of debt overall and can be harder to tame once it builds up.

Your bottom line
If you’re trying to decide which kind of debt to pay down first, go with the cards. You’ll be stuck with your student loans or mortgage for a longer period of time, but once you pay off your cards for good, you’ll feel significantly less stressed.

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