Credit Card debts: Causes and Prevention

Credit card debt is a major social problem, leading many individual into bankruptcy. To eliminate credit card debt from your own life, it is best to recognize this problem as both a social and individual problem.









Causes of Credit Card debts:


1)Credit card interest rates are high, therefore the profits can be high. Banks and other credit card issuers are after their slice of that big money. If you really think that 'they are after your money', it would be better for you to resist.

2)It is very easy to get credit cards, multiple credit cards in fact. Issuers of credit cards make it easy for you, if you have had no debt problems in the past. If they seem to take it lightly, it is understandable that their customers do too. But remember, they take the risk factors into account when setting interest rates.

3)Friends, neighbours and work colleagues will probably all have multiple credit cards, talking about them and flashing them around from time to time. That could influence the attitute of a person towards it.

4)A monthly spending plan is always essential. Without money management, you will have no idea where your money is going. People may spend hundreds of dollars unnecessarily each month and end up having to charge purchases on which they should have spent that money.

5)Many people don't understand how money works and grows, how to save and invest for a rainy day, or even why they should balance their checkbook. Financial mistakes are increasingly expensive and complicated to resolve. People should be responsible towords their money and lifestyle.











Preventions of Credit Card debts:


1)Create a budget and stick to it. A clear budget that includes all of your monthly bills, food, entertainment and miscellaneous items will prevent you from spending thoughtlessly and buying on impulse.

2)Maintain clear financial records and a regular payment schedule. Disorganization can cause you to overlook bills and overestimate how much you have to spend. Dedicate a specific time every month (just after payday is best) when you can sit down with your finances, pay your bills and determine how much you have to spend for the month ahead.

3)Only use credit when you can pay it off within a few months. Using credit cards with no plan to pay the debt is reckless, irresponsible and can get you into big trouble. The longer it takes you to pay off the debt, the more interest that debt will incur--and the more you'll end up paying.

4)Shred or tear up credit card applications that come to you in the mail. Just because you get the application doesn't mean you need or want the card. Destroying the application will prevent you from using it and protect you from potential identity thieves.

5)Maintain insurance coverage. Health and home insurance are absolute musts in order to avoid bankruptcy. Unexpected medical bills, flood damage and fire damage can lead to ruin if you aren't properly covered.