Cause and Prevention of Credit Card DEBT

Consumer likes to purchases an item or service through credit card anytime anywhere. The convenience of using credit cards has stimulated the usage among people which has become a big social problem as it can lead many people into bankruptcy. Debts will increase when the consumer unable to pay the company for the money he or she spent. There have several reasons that cause the credit cards debt, such as following:


Poor Money Management
People are unconscious in conducting a monthly spending plan and do not keep track of monthly bills and that why individuals have accumulated many credit card debts. They usually spent on the unnecessary or no value items and when there is a need to purchases the required items people may short of cash and use credit card frequently. There might have some charge on purchasing using credit card, people tend to pay for the interest on these purchases every month. Thus, it end up with debt when they unable to make payment.

Lifestyle

Nowadays, people are likely to live in the lifestyles that they preferring even they may spend more than they earn. Therefore, they find that using credit cards is the one of the way to afford their lifestyle. For example, they may prefer to have luxury living style such as to having decoration, limousine, having meal in high-class restaurant, braded clothes and so on which are the causes of credit card debt to be a lot when they unable to pay the debts.

Consumption
Due to the convenience of using credit card, people tend not to bring a lot of cash goes for shopping. What they need just to bring along the light and handy credit card and purchase the merchandises and services that they want rather than to worry the insufficient cash to be consume. As a result, they would not realize how much they actually expended at the time, they will only know until the bill send from credit card bank which may causes a lot of debt need to pay.

Financial Ignorance
People less of the financial knowledge, so they spent money without taking into the consideration the key concept of saving and investing. They spend too much and save little. They are responsible to theirs life and money anyways so that they have to find out the correct ways to spend money. However, nowadays financial mistakes are increasingly expensive and complicated to resolve. The deficiency of financial knowledge raises the credit card debts because people tend to use credit cards in the incorrect ways without knowing the financial strength and limitation.

On the other hand, there have some of the PREVENTION METHODS to overcome credit card debts:

1. Set a clear BUDGET

People have to create clear budget and stick on it that includes monthly bills, food, clothes, entertainment and miscellaneous expenses will prevent from overspending and fall under deeper debt load. Otherwise, can get advices from a consumer credit counseling centre where they will help you work out different payment options for your credit cards.

2. Deal with CREDITORS

Address the problem to creditors to investigate whether they could give revised payment arrangement when having trouble to pay off debts because running away is not a good solution. If not, may refer to Fair Debt Collection Practices Act if the collection of money from creditors is not fair enough. Creditors may approve proposal and accept modified payment plan when hiring a good credit card debt consolidation companies.

3. Get rids of DEBIT CARD

By using debit cards, people will not spend more money than money they have and wont over the limit. There is no doubt that debit cards are a superb toll to get rid of credit card debt.

4. Get rids of CREDIT CARD

Get rids of credit card is one of the ways to live a debt free life. People can limit the number of card and using credit card that provide low interest balance transfers, transfer the balances from your other cards onto the card with the lowest rate. Besides that, only use the credit card when there is an emergency.

5. SELF CONTROL AND DISCIPLINE

The best practices of getting out of the credit card debt are able to pay back the full amount each month and only use in emergencies. Thus, self control and discipline to keep these cards in wallet and would not overspend. Besides that, avoid impulse purchases. Only purchase items that really needed. Do not buy it if it not a necessity. If you think you have badly in self control you can tear up credit card applications when the credit card company sends you those application forms.

Resisting the pressures of the credit card society will be a lot easier once you have set your mind to it, and started to feel the benefits. Enjoy the process, and you will be a cash convert for the rest of your wealthy life. ^^