Credit card is any card that may be used repeatedly to borrow money or buy products and services on credit. It is issued by banks, savings and loans, retail stores, and other businesses. It has been found that there are many people who have been relying on their credit cards too much and are now in debt. The CAUSES of credit card debts are as follow:
Missing payments
Many credit card users only pay the interest and the minimum amount of principal when the debt is due and never fully repaying the entire sum. Thus, the debt accumulates and increases via interest. Finally, the card users are unable to pay the debt.
Overspending
The prices of goods and services going up and not the income, but people still keep on spending as much as they got used to regardless of the reduced income. Thus, they will spend beyond their earnings. They choose to use credit card to purchase goods and services and to cover basic living expenses. However, they may found difficulties or unable to pay back the amount.
The prices of goods and services going up and not the income, but people still keep on spending as much as they got used to regardless of the reduced income. Thus, they will spend beyond their earnings. They choose to use credit card to purchase goods and services and to cover basic living expenses. However, they may found difficulties or unable to pay back the amount.
Having too Many Credit Cards
The more credit cards a person has, the more likely they are to use them. For example, a credit card holder will has more credit limit if he or she holding more than one card.
Gambling
Gambling is fun and entertaining but if it becomes addictive it'll be hard to stop. This won't become a problem if people spend their extra money for gambling. But borrowing money through the credit cards for gambling will surely lead the card users to a financial disaster.
The PREVENTATIONS of credit card debts are as follow:
Good Money Management
A monthly spending plan is essential. Without that, people have no idea where their money is going. Planning is no more difficult than writing down the expenses and income and reconciling the two. This will enable them to see clearly where their money goes. Besides, people should adjust their expenses based on their new income.
The smart card holder only spends what they can afford. They only use credit card when they are sure that they can pay the balance off at the end of the month.
A monthly spending plan is essential. Without that, people have no idea where their money is going. Planning is no more difficult than writing down the expenses and income and reconciling the two. This will enable them to see clearly where their money goes. Besides, people should adjust their expenses based on their new income.The smart card holder only spends what they can afford. They only use credit card when they are sure that they can pay the balance off at the end of the month.
Prioritize Debt Repayment
Credit card users are advisable to pay off their debts to get rid of the highest interest payment first. List all of your credit card debts, and the amount paying each month. Pay off the lowest amount first. Then use that money to start paying off the second lowest amount.
Credit card users are advisable to pay off their debts to get rid of the highest interest payment first. List all of your credit card debts, and the amount paying each month. Pay off the lowest amount first. Then use that money to start paying off the second lowest amount.
Cut Up the Extra Credit Cards
Pick the one with the lowest interest rate and cut up the rest. The one that been kept should be deemed an ‘emergency card.” Just use one or two cards and use them as a financial tool. Remember that a credit card is not the same as free money.
Pick the one with the lowest interest rate and cut up the rest. The one that been kept should be deemed an ‘emergency card.” Just use one or two cards and use them as a financial tool. Remember that a credit card is not the same as free money.
Get Professional Help
There are plenty of debt consolidation firms offering to help, but do bear in mind these companies ultimately make money from a card holder’s debt. There are four main agencies that offer free, impartial advice for those in debt: the Citizens Advice Bureau, the Consumer Credit Counselling Service, National Debtline, and Payplan. These are non-profit making organisations that guide those in debt through the options available to them.
It has been noted that it can be very difficult living without credit cards but a financial help site has acknowledged that they can also be very dangerous as many people are facing huge debts after using their card too often.
It has been noted that it can be very difficult living without credit cards but a financial help site has acknowledged that they can also be very dangerous as many people are facing huge debts after using their card too often.
As a conclusion, credit cards should be used for emergencies only, unless people are plan on paying the entire balance off immediately.
References:
http://ezinearticles.com/?Why-Credit-Card-Abuse-Causes-So-Much-Debt&id=1018899
http://www.credit-land.com/articles/articles_page_68600_1881780_120.php
http://www.articlesbase.com/finance-articles/using-credit-cards-can-cause-debt-719910.html
http://www.insolvencyhelpline.co.uk/debt_special_situations/credit-card-debt.php
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