The holiday season is a time to reconnect with friends and family, indulge in the occasional baked good and listen to some much-loved — and sometimes cheesy — seasonal music. But sometimes the holidays also entail spending a little outside our means on gifts and racking up debt on credit cards.
This isn’t the season of expenses and extravagance for everyone, though, and a soon-to-be-released study found that people who are impatient are more likely to have bad credit scores, as they are more apt to choose immediate gratification rather than wait later for a larger reward.
Researchers recruited 437 participants with low-to-moderate incomes during tax season at a community center in Boston that was offering tax preparation help. They were all given questionnaires on which they made choices between an immediate, smaller reward and a larger reward, which they would receive later.
The questionnaires found that the impatient people had lower credit scores, which can indicate some problems with credit in the past, such as failing to pay bills or defaulting on a mortgage.
“Conceptually, it does make sense that how people discount the future, i.e. how impatient they are, affects their decision to default on their loans,” said researcher Stephan Meier. “Individuals accumulate debt and then have to decide whether to repay the money or use the money for something else.”
If they don’t pay off their debt, Meier says, they will yield short-term benefits, such as immediate, available cash for something else they want or need. However, greater problems will arise in the future, such as when a landlord or mortgage lender
Source: Association for Psychological Science
Heather Rudow is a staff writer for Counseling Today. Email her at hrudow@counseling.org.