Credit Cards Debts :Causes & Prevention

Do you have a credit card? How did you use it?

Credit card is a card issued by a bank that allows the holder to buy goods and services without cash, after that holder need to pay back for bank. If, on the due date, the holder does not pay the balance, the bank will charge interest on the unpaid balance.

Causes:
Recently many people are suffering a lot debt due to inappropriately use of credit card. Several reasons make them face such the kind of problems, for example they have a poor management in their money spending. Many people always prefer not to do any money planning before they spend their money, this may cause them over budget or may be buy something that are unnecessary in their daily life. When the end of the month is around the corner, they will only realize that their spending is too much and they need to clear a big amount for the credit card. Of course it will automatically become a big debt for them. Secondly, people like to use credit card to buy what they are like because they like to enjoy the luxury life. When due date of the credit card payment, they unable to pay the payment, they will go and register other credit card to cover the payment. This process continue repeated, user will loss their self control and make them continue to pay the interest and the amount of debt will become bigger and bigger.

Prevention:

There have few prevention people can reduce the credit card debt. Firstly, people should create a realistic monthly budget for your expenses. List all monthly bills and necessities and make sure expenses are covered by your monthly income. Allow only the money remaining after the bills are paid to be spent elsewhere. Stay within your budget guidelines.

Secondly, People should avoid making any purchases with your credit during peak buying seasons such as Christmas and Chinese New Year. Credit card companies will charge more interest during these peak seasons because they know that everyone is buying more items with their credit cards, so this will increase the amount of debt.

Thirdly, limit the use of credit cards. There is no real reason why you should be using your credit card to make daily purchases. If you prefer not carry cash around, you can get yourself a debit card which works the same as a credit card but this card have to save your money inside the account only can use it, so that is more easier to control of your debt.

By using the credit card can bring benefit for people at the same time this can create problems for people. Consumers should know how to control themselves to use the credit card.