Credit Card Debts: Causes and Preventions

People like to use credit cards to make payments or purchase goods and services because of its convenience. Credit card is a system of payment named after the small plastic card issued to users of this system. Users buy goods and services based on users' promise to pay for it. Today, credit cards have become a necessity for most of us and it is very commonly used even among teenagers and students. Therefore many people face the problem of excessive credit card debts. Example of unsecured credit card debts is the total credit card debts which is borrowed from the creditor. Consumers will be charged higher interest rates for late payments. Let's look at the causes and prevention of credit card debts.

Causes of credit card debts

The first and most common cause is poor money management. We must plan our spending properly to prevent overspending. If we do not do so, it will lead to excessive debts because we are unaware of unnecessary overspending. As a result, we will be surprised when we receive our credit card bills with large amount of debts.

Second, gambling also is one of the causes of credit card debts. Gambling is the favorite entertainment for most of the people. However, it will cause many problems once you become addicted. Gamblers would like to take loans through credit cards and did not consider its consequences. Thus, their credit card debts become higher and unaffordable.

Next, saving too little or not at all is also a cause of credit card debts. Today, many people do not have saving habits especially teenagers. They tend to spend out all their money after receiving their income instead of saving. So, it will cause them unable to pay their credit card debts

In addition, many people facing reduced income but consistent expenses problems. Due to recession, salaries of individual tend to be reduced but the expenses are remained. This will increase the burden of individuals and cause the person unable to settle their credit card debts.

Another cause on credit card debts is college students' difficulties in adjusting to their new found financial independence. This is because they are thinking of their parents to help them pay all the debts. Therefore they are not aware of excessive debts of the credit card.

Prevention of credit card debts

It is important for us to prevent those credit card debts. We can reduce our credit card limit so that it will help us to spend according to the limit given. Another interesting suggestion from the web is to photocopy the credit card offers, including the interest rate and terms. Then, write a letter to the credit card companies giving them feedbacks that the competitors are offering a lower interest rate, this will encourage better offers for consumers as the credit card companies will not want to lose their customers.

Next, try to pay double the minimum payment when we can afford it. This means that if we have additional income in this month, we can pay extra for our credit card debts this month. It can help us to settle our credit card balance more quickly.

Third, cut up our cards so that you are not tempted to use them. If you have more than one credit card, try to cut up your cards. This can help you to reduce amount of spending.

Lastly, proper planning and budget for our spending. Everyone of us should set our budget for monthly spending to avoid unexpected expenditure. With proper planning, we can remind ourselves not to overspend. Thus, we will be able to stop credit card debts’ problems and begin our journey to financial freedom.