Monday, June 29, 2009

Credit Card Debt: Causes and Prevention







Credit card debt is a burgeoning problem to all. Debt is all around us and getting worse every day. The fact is that through credit card debt is expensive to fund with high interest rate and that there is nearly always some form of credit-usage fee in our account statement. For your information, debt is divided into two groups which are good debt and bad debt. Good debt is such as buying an item like a house or mortgage that will increase in value and followed by bad debt such as 50 “flat screen television you bought on your credit card and are paying the minimum balance on.

The causes of Credit Card Debt
Fact of life
It is that credit card holders do not know how to spend wisely. In other words they would have budget prepared in their life for spending.

“Because they are paying me to do it” policy.
Most of us would put our credit card debt into one debt because the credit card issuer is paying you to do it!! A true fact is that nowadays the credit card company has now become competitive that issuers are fighting among themselves to get sign up to their card.

To Entertain
They are certain people who would use credit card for their entertainment purpose such as clubbing, shopping and holidays. These type of expenses is considered to be unnecessary expenses that should be avoided.

Furthermore, prevention has to be done to avoid credit card debt.
Do not spend more than you actually need.
Money has to spend when necessities only and not for luxurious. Besides that, all the money that you save will get rid of the debt.

Settle down payment in either one of the two ways
a) Take the account with the smallest balance and pay it down first. Try to double the payment due but if that is not possible yet, pay as much extra month that you can afford by achieving the goal of paying the smallest account first, you will become more motivated to continue on your quest.
b) Alternatively, take the account with the largest annual percentage rate and work your plan of attack on this bill first. Again, try to double the payment or at least pay as much extra as you can.

Follow the Plan
Keep following the plan until all credit cards have been paid off. Do not use those accounts again to keep the balances at zero.
Extra Effort
Extra Once your bill is paid off, take that some payment you had been making and apply it towards your next credit card. This extra amount, along with the minimum payment due, will really begin to take a chunk off that balance.



2 comments:

Unknown said...

Perhaps the existence of Debit Card is to eliminate some of the disadvantage facing by the credit card users.

SolDiv said...

Credit card will not cause any problem if it is use wisely by the owners. The problem is that the bank allows credit card owners use thier cards excessively where banks hope to gain interest on the portion the users are not able to pay in time.

Post a Comment