Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
Why You Feel Richer With a Higher Credit Limit
Episode 85 of Behavioral Economics with Fexingo explores the 'credit limit effect' — how a higher credit limit changes your spending psychology even if you never max out. Lucas and Luna unpack a 2025 study from the Journal of Consumer Research showing that consumers with a $10,000 limit spend 18% more per month than those with a $5,000 limit, controlling for income and credit score. They discuss the 'anchoring' mechanism — your brain treats the limit as a reference point for what you can afford — and the real-world implications for personal finance and credit card design…
The skinny
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