Credit Card debts: Causes and Prevention

Now days it seems that credit cards are almost a necessity, rather than a luxury, which has caused many people to have a huge problem with credit card debt. Many people now have more than one credit card with a balance and you may even be one of those people. If you are one of the millions of people wanting to get out of credit card debt, then you first need to understand what caused the credit card debt problem to begin with.

A credit card is exactly what the name implies. It is a card with which you are able to use by borrowing on credit. Every time you use a credit card, you are borrowing money from the credit card issuer. Also, each time you use your credit card, you are increasing your credit card debt.

Debt consolidation programs are swamped with applicants. While many have turned to these programs to help get them out of debt, you can save money and do the work yourself. If you receive pre-approved credit card applications in the mail, save them! They can actually help you save a ton of money and interest charges.

1. Photocopy the credit card offer, including the interest rate and terms. Create a letter to your credit card company/companies stating that you are thinking of switching to their competition because they are offering a far more reasonable interest rate. Credit card companies do not want to lose your business. Nine times out of ten they will match or even offer a lower rate than the competition has offered.

2. If you can afford it, pay double the minimum payment. The minimum payment usually pays just enough to cover the interest and a little more that pays down the balance. Paying extra will pay your balance more quickly.

3. Pay off smaller balances first. It is common for a person to try to focus on their cards with larger balances first. Pay off the smaller ones. It will take less time and you will feel a sense of satisfaction when you have actually completed your goal. This will boost your confidence and make it easier to tackle the higher balances.

4. Cut up your cards so that you are not tempted to use them. Save one card for emergencies.

Causes of consumer using credit cards

1.My credit card is my emergency fund.

Why bother saving up money for an emergency in a savings account? Don’t savings accounts pay only 1% interest anyways? I’ll just use my credit card in an emergency. I’ll find the money to pay it off whenever the bill comes in.

2.You can buy whatever you want now.

You’ll be able to pay it off later. That shiny HDTV and sound system are literally calling your name. You’ll pay them off in a few months and get to enjoy them now. Isn’t that what life is about? Plus, Circuit City is going under… there are bound to be a ton of deals you can buy now and pay for later.

3.Spending is your comfort activity.

You had a rough day, week, or month. Spending feels good. You can pay it off later, but for now it just makes everything a little bit brighter in your day.

Of course all of these are terrible reasons for credit card debt, but yet there are still many credit card holders and there are still alot more of reasons to have a credit card.