Credit card is any card that may be used repeatedly to borrow money or buy products and services on credit. It is issued by banks, savings and loans, retail stores, and other businesses. The credit card debt has become a severe issue and it is the major cause of bankruptcies each year because many people have never realized of its consequences from financial and non financial perspectives.
Causes:
1. Less Income, More Expenses
This is occurs when the breadwinner of the household loses his job but monthly expenses are not cut down hence the income less than expenses and leads to a rise in credit card debt.
2. Poor Money Management
Poor Money Management is the main reason why so many people lead to rise in credit card debt. If don’t have a monthly spending plan and not keeping track of your monthly bills make you unaware of where your money is going. Furthermore if u buys unnecessary items, you might also be charging your necessary purchases on your credit card, forcing you to pay interest on these purchases every month.
Poor Money Management is the main reason why so many people lead to rise in credit card debt. If don’t have a monthly spending plan and not keeping track of your monthly bills make you unaware of where your money is going. Furthermore if u buys unnecessary items, you might also be charging your necessary purchases on your credit card, forcing you to pay interest on these purchases every month.
3. Big medical expenses
If you need treatment now, but you do not have enough cash to pay the treatment so what do you do? You use your credit card because you do not have enough savings in the bank and almost all the doctors accept credit card payment.
If you need treatment now, but you do not have enough cash to pay the treatment so what do you do? You use your credit card because you do not have enough savings in the bank and almost all the doctors accept credit card payment.
Prevention:
1. Use it Like Cash, Not a Credit Card
You need to use your credit card like cash by paying your balance in full each month.
1. Use it Like Cash, Not a Credit Card
You need to use your credit card like cash by paying your balance in full each month.
2. Avoid extra expenses
Sometimes it’s the little extra expenses that sneak up on you before you even know it.
3. Early Education
The best method for prevention is teaching our youngest generation all about money before they even qualify for a credit card. In addition, advertisers market more to younger and younger children, so it’s necessary to teach them very early about the lure of money and how to manage finances. The earlier children learn how to manage finances the less likely they will be to fall into credit card and debt problems as an adult.
References:
http://www.cardratings.com/howtoavoidcreditcarddebt.html
http://www.3debtconsolidation.com/top10-causes.html
1 Comment:
I don't have a credit card. Although it is very useful and convenient when purchase goods, it is a debt to its holder. Interest charged on unpaid debt. Many cardholders incurred credit card debts and some of them declared bankrupt. That's why, credit card have to be used wisely.
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