Credit card debt is an example of unsecured consumer debt. This will occur when consumers continuously used credit card to make payment. The debts will be increased due to there is an interest charge on the credit payment. Therefore, nowadays, many people owe credit card debts and they are unable to repay the debts and interest charged by bank.
Causes of credit card debts:
Poor money management - Consumers may not have a proper plan for money spending over the month. Therefore, the money they spend is more than their monthly income. As a result, when they received the bank statement from bank, they are unable to pay the debts.
Less Income, more expenses - Due to current economic condition ( inflation ), all products' price has been increased rapidly. In other words, this shows that expenses that occur will increase if compare to last few years. As a consequence, income is unable to cover all the expenses, so it may lead to use credit card to make payment first.
No saving - Sometimes, when there is an unanticipated event that need a huge amount of money, because of consumer has no saving in the bank and therefore they may use credit card to setttle the payment first.
Prevention of credit card debts :
Proper Money Management - You should determine your monthly income and needed expenses, and plan the expenses that is neccesary over the month. And if there still have money at the end of the month, you should save the money into bank for future use.
Avoid extra expenses - Those expenses that are extra can eliminate it. For example, having dinner at home rather than at restaurant.
Use cash to make payment - You can settle all the paymeny by using cash, this is because no interest will be charged on the cash. In addition, you should reduce the number of using credit card when make payment.
References :
- Top 10 causes of debt
- 3debtconsolidation - Top 10 Causes of debt
- How to avoid Credit Card Debt
credit card made us use future money
ReplyDeleteUsing future money is happy, but if didn't manage well, will suffer for debts. Thus, quite a good suggestion to prevent credit card debts
ReplyDelete