Personal finance II: debt traps and digital payments

Remember what it feels like to hand a fifty-franc note across a shop counter? Researchers call that slight sinking feeling the ‘pain of paying’: when you pay in cash, you see and feel the money leaving your hands – and automatically ask yourself whether the purchase is worth it.

With digital payments, this pain almost completely disappears: tap your card, take out your phone, tap ‘Buy now’ – no money visibly changes hands. That is convenient, but it has a side effect: If you do not feel the pain, it is easier to spend money more quickly. So it is worth knowing when your money actually leaves your account with each payment method:

• Debit card: linked directly to your account – the money is taken immediately, and without funds you cannot pay. The card for your youth account is a debit card.
• Payment apps: work like a debit card without the card – the money is taken immediately from your account or a balance you have topped up. Twint is widely used in Schweiz; however, it does not yet work with accounts at banks in Liechtenstein – local banks offer their own payment apps, such as LiPay from Liechtensteinische Landesbank.
• Credit card: the bank pays the money on your behalf. All your purchases for the month appear together on one bill – you only pay at the end of the month. If you do not then pay the bill in full, you face hefty interest charges.
• Buy now, pay later (BNPL): you only pay after 30 days or in instalments over several weeks or months. More on this in a moment, because this is where the latest trap lies.

Remember the pattern in the graphic: The later the money leaves your account, and the less visible this is, the harder it is to stay in control.

Debt rarely starts with one big foolish decision – more often, it comes from lots of small things you barely think about. You should know these four traps:

1. Buy now, pay later instalments – the latest trap: When shopping online, ‘pay in instalments’ is often just a click away and feels free. But three orders with three small instalments each already mean nine payment dates. Lose track or miss an instalment and you face reminder fees; eventually, a debt collection agency gets in touch. Surveys from Deutschland show that a substantial proportion of young adults have already received letters from debt collection agencies. And from “Banks: their roles, loans and interest” you know that neglecting bills damages your creditworthiness – which can cause problems later when you want a mobile phone contract or are looking for a home.
2. Subscription traps: The free month of a streaming or gym subscription automatically becomes a paid subscription unless you cancel in time. CHF 12.90 seems harmless on its own – but four forgotten subscriptions cost over CHF 600 a year.
3. In-app purchases: Games sell progress in tiny amounts – CHF 2 here, CHF 5 there. Because each amount is so small, the pain of paying disappears completely; you only see the total on your statement.
4. Small loans: ‘CHF 5000 in your account immediately!’ – consumer loans offer quick money at high interest rates. You know the logic from “Banks: their roles, loans and interest”: the less certain repayment is, the higher the interest rate. If you need a loan to pay old bills, you are already in a debt spiral.

Many shops and apps also use psychological tricks – known as dark patterns – to make you buy faster and make cancelling harder. You will look at these more closely in “Dark Patterns: How Apps and Shops Manipulate Us”. For now, remember: if something feels particularly easy, there is usually a reason.

Money problems creep up on you. Take these warning signs seriously – in yourself and in your friends:

• You deliberately stop checking your account balance.
• Bills and payment reminders are left unopened.
• You pay old bills with new money – for example, through your next BNPL order or a loan.
• You hide purchases or keep borrowing small amounts.

If this sounds familiar, remember: The sooner you act, the easier it is to get back on track. You can take the first steps yourself:

1. Get a clear overview: Put all unpaid bills, instalments and subscriptions on a list – the budget from “Personal Finance I: Budgeting, Saving and Payslips” is the tool for this. It is an uncomfortable moment, but it is the turning point.
2. Cancel subscriptions and stop spending: Pause everything you do not need; deliberately replace card and app payments with cash until the pain of paying returns.
3. Talk rather than feel ashamed: Speak to your parents, your workplace trainer or another person you trust. Debt is not a character flaw – but it is a problem that rarely gets smaller if you face it alone.
4. Get professional help – it is free: In Liechtenstein, Caritas Liechtenstein provides budget and debt advice on behalf of the government. For young people, aha – Tipps & Infos für junge Leute (aha.li) offers accessible information about money. Pro Juventute's advice service is available around the clock via 147 (phone, SMS or chat at 147.ch) – including from Liechtenstein.