Wednesday, February 11, 2009

Credit Card debts: Causes and Prevention

Credit card debt is an example of unsecured consumer debt, access through ISO 7810 plastic credit card। (From Wikipedia)
Responsible use of a credit card does not exist। Credit card debt is major problem in America. There are about $962 million at US (July 2008).
There is NO positive side to credit card use. You spend more if you use credit cards. Even by paying the bills on time, you are not beating the system? But most families don’t pay on time. The average family today carries $8,000 in credit card debt according to the American Bankers’ Association.
When you pay cash, you can ‘feel’ the money leaving you। This is not true with credit cards. Flipping a credit card up on a counter registers nothing emotionally. If you use credit cards instead of cash you will spend 12-18% more. This is money you could have saved

Course of credit card debts

  1. Poor Money Management: Poor money management is one of the best reasons that why so many families have accumulated many credit card debts। It is because people are unaware to conduct a monthly spending plan and do not keep track of monthly bills. People have never realized their spending o the items that are useless and do not have any value in their life. Thus, it has lead to a rise in debts by using credit cards.
  2. Unemployment: Households are forced to use credit card for groceries, utilities and some expenses purposes to maintain current lifestyle when the main breadwinner of the household has loss his job and could not find a new job during short periods। This may lead to a rise in debt when expenses are not cut down in line with the reduction in income.
  3. Gambling: Gambling is popular entertainment। Everyone likes to gamble with the money they have. How many come back home with a bag full of cash? Very few. The guarantee in this game of chance is that will be definitely paying to the house. Gambling loans are also available which lead to debt.


  1. Budget: It is important to have a plan for your money so that you will know exactly where all if your funds are going। Many people believe that a budget will be constricting and not allow them any freedom. Really the opposite is true. A budget allows you the freedom of having peace of mind knowing that all of your bills are paid and the money has been allocated ahead of time for these expenses.
  2. Self control and discipline: One of the best practices is to have a direct set up so that able to pay back the full amount each month and use in emergencies। Thus, self control and discipline to keep these cards in wallet and would not overspend.
  3. Keep your credit limit low: A low credit limit will help you resist the urge to splurge। If you receive a congratulatory letter informing you your credit limit has been increased, you should call the credit card issuer and decline the offer. If the issuer would not do it, close the account.

The main prevention is aware of the causes of credit card debts and starts to spend less in order to stay with well financial situation।

The main prevention is aware of the causes of credit card debts and starts to spend less in order to stay with well financial situation।


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