Credit Card Debts: Causes and Prevention
Credit card is a card that repeatedly used to buy products or items and services on credit basis which issued by banks or other financial institutions. Extra and added security as well as ease of shopping and travelling is provided when using credit card. However, people tend to misuse their credit cards which lead to credit card debts. This leads to an increase problems of bankruptcies each year.
The major factor that brings to a credit card debt is poor money management. Poor management of money is one of the biggest causes of credit card debt due to the accumulated of credit card debts. People do not keep track on their bills and monthly expenditures. Without keeping record of their spending, people are not aware how much they are spending which raise debts in one month. If people continue to swip credit cards, they do not realize that later on in the future they are unable to pay back the debts.
Secondly is unemployment. Unemployment is also one of the factors that cause credit card debts. Due to economic downturn, many people lost their job and to make matter worse, they are unable to keep up with the daily living expenses. So the short cut way is to use the future money which is the credit card to cover up their future living expenditures. When the expenses are not cut down to cover the reduction of the income, this can lead to a rise of debt.
Lastly, the cause of credit card debt is no saving cushion. People will tend to use future money when they have credit. This means they do not have savings in the banks. It is hard to save money when they spend more than their income. The benefit of savings is to help to cover up the expenses such as illness, job layoff, education, insurance and other important expenses.
There are a few preventive methods can be taken to avoid credit card debt. Having a budget is important. By having budget, we have can think and plan our expenses. We need to keep track on our receipt and bills so that we do not over spend. By having budget, we shall can somehow prevent credit card debt.
Not to mention, self control and discipline is important. Those who have credit card they must learn to be self control and self discipline. This is to avoid overspending and can limit the credit card spending. Lastly is by contacting and dealing with the creditors. When you have problem settling your debts, you can address the problem with the creditors. They can identify whether they could give a revised payment arrangement.
