Credit Card debts: Causes and Prevention

Monday, June 29, 2009

With credit cards easily obtained in nowadays, a number of people burdened by unpaid credit card debts were increasing .That is a major cause of declare bankruptcies because people never consider consequences from their financial situation when using a credit card.

Causes for credit card debts

Less Income, More Expenses
It so happens when the people losing their job but monthly expenses are not cut down in line with the reduction in income. This obviously leads to a rise in debt. They are forced to use their credit cards for their daily spending to maintain their lifestyle

Poor Money Management
People are like to spending hundreds every month towards their daily entertainment life such as smoking, clubbing, and drunk. They do not realize it and unaware of where money is going on. This a a reason why so many people accumulate a lots of debts due to not having a planning for their spending.
Gambling
Gambling has become part of entertainments for many people in life. It is hard to stop when it becomes addictive. Thus, it will surely lead to a financial disaster if borrowing money through credit card. it so happen because most people hope to win back the money when suffer a loss in gambling

No saving culture in life
Due to the developing of e-commerce in internet, people are like using credit cards to purchase goods and services on internet. They would like to use the future money and have not extra money to save in bank. When people are spending more than their income, they will be very hard to manage their savings accounts.

reference link
http://www.3debtconsolidation.com/top10-causes.html




Prevention for credit card debts

Manage your finances
When using credit card to purchase goods and services, we must determining our monthly income and expenses. It will help to keep on track before you ever even pull out the credit card .Thus, we also need some savings to avoid having to put large amounts of debt on a credit card in times of a crisis.
Early Education
Due to the growing in e-commerce field, credit card payment has become a common way payment in daily life. It’s imperative to teach our younger generation very early about the value of money and how to manage finances. This is a best way to prevent them will be to fall into credit card debt problems in future

Use it like Cash, Not a Credit Card
Credit card is not cash. It is just a plastic card slides right out of your wallet with little effort at the checkout counter. Each time you pull it out it looks and feels the same. You cannot physically feel your charges climbing higher and higher. But with cash on hand can physically feel how much or how little you have. So, they have a self control with their money when spending for goods and services.

Pay on time
Due to universal default clause in credit cards’ terms and conditions, credit card companies can raise your interest rate if you are late paying any creditor. Thus, we must never make a late payment to anyone including car and house payments. This is a best way to reduce credit card debt.

reference link
http://www.cardratings.com/howtoavoidcreditcarddebt.html