Credit Card Debts : Causes and Preventions

A credit card is a system of payment named after the small plastic card issued to users of the system which allows the owner to obtain goods and servives without the requirement to pay cash and on credit terms.Or a card (usually plastic) that assures a seller that the person using it has a satisfactory credit rating and that the issuer will see to it that the seller receives payment for the merchandise delivered. It is a card that may be used repeatedly to borrow money or buy products and services on credit. Its issued by banks, savings and loans , retail stores, and the other busimesses giving consumers the right to charge purchases and pay for them later.

Credit card debt is dumb. Most normal people are just plain broke because they are in debt up to their eyeballs with no hope of help. If you're in debt, then you're a slave because you do not have the freedom to use your money to help change your family tree. Debt ocurred when a client of a credit card company purchases an item or service through the card system. Debt accumulates and amount increases via the certain interest and the penalties will be given when the consumer does not pay the money to the company that he or she has spent. The company will charge late payment penalty to the consumer that are not paying the debt on time and also will report the late payment to credit rating agencies. Besides, credit card debts is an example of unsecure consumer debts accesses through the small plastic card.

The causes of credit card debts are stated as the following :

Firtly, the poor money management may caused the debts.The spending plan is very critaical for every month. If u do not have a well spending plan u may face the problem of spending money. You may have no idea where is your money spent.The good planning on spent money may lead you make a wonderful decision on how you spent your money.

Secondly is the underemployment.A close cousin to No. 1, people who experience under employment may continue to think of it as only temporary or if they are coming off unemployment feel a false sense of relief. Yes, you deserve a break, but this is not the time. Get those expenses in line with your current income. Down the road if you increase your income due to more hours, a second job, or a better job, then is the time to start adding in some of the previous spending before you became underemployed.

Lastly, is financial illiteracy. Many people do not understand how money works and grows, how to save and invest for a rainy day, or even why they should balance their checkbook. You have to know that you are responsible for your life and your money anyway. Financial mistakes are increasingly expensive and complicated to resolve or even can't solve it.You need to get educated and get in control to avoid the debts.

Now, im talking about how to prevent the debts.You have to pay off the entire outstanding balance each month to avoid the credit card debts. If you must carry a balance from time to time, pay off most of the balance each month. If you can only make the minimum payment each month, you are in over your head. The best methods is to stop using the credit card until you pay the entire balance off.

Besides, another good way to cut down the debts is not to charge the items like meals, groceries, or going to movies that would not exist on the statement. using cash nmoney to pay all those things, its might you to reduce the debts and save the credit for future or real necessities.

Futhermore, you have to make sure that the sufficient money to pay off the purchases after using the credit card. You have to bank in the money on time to cover the debts. You must have a budget before you make a purchase.If you do not have enough money to cover the purchase, and the item is not for an emergency, you do not used the credit card to charge it.

References :
1. http://en.wikipedia.org/wiki/Credit_card_debt
2.http://www.nolo.com/

Prepared by Lew Pei Ean
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