Nowadays, people are more likely to use credit card to pay for their expenses rather than cash. Most of them today are using credit card to purchase everything. In other words, people like to use future money (credit card) as they do not have enough cash on their hand. Thus, credit card debts are the major cause of bankruptcy each of the year. This is because the people are never realized of its consequences from financial and non financial perspective.
CAUSES of Credit Card Debts
1. Financial illiteracy
Many people don't understand how money works and grows, how t save and invest for a rainy day, or even why they should balance their checkbook. The school don't teach it, your parent may not have sat you down and explained it, but it doesn't matter. You are responsible for your money and your life anyway. Financial mistakes are increasingly expensive and complicated to resolve.
2.Under-employment
People who experienced under employment may continue to think of it as only temporary or if they are coming off unemployment feel a false sense of relief. Yes, you deserve a break, but this is not the time. Get those expenses in line with your current income. Down the road if you increase your income due to more hours, a second job, or a better job, then is the time to start adding in some of the previous spending before you became unemployment.
3.Poor Money Management
A monthly spending plan is essentials. Without one you have no ideas where your money is going. You maybe spending hundreds of dollars unnecessary each month and end up having to charge purchases on which you should have spent the money. Planning is no more difficult than write down your expenses and income and reconciling the two. You will be surprise at how powerful you'll fell when you are making thoughtful decisions about where and when to spend your money.
PREVENTION of Credit Card Debts
1.Credit counseling and debt settlement
Each help clients by educating them in ways to get out of debts and stay that way, but the approaches are significantly different. The objectives of credit counseling is to pay off debts in full by negotiating lower interest rates, while debt companies pay off debts fast by negotiating reductions in the amount owed.
2.Choose a credit card that offer lowest interest rate
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 a far more reasonable interest rate. Credit card companies do not want to lose your business. Nine times out ten they will match or even offer a lower rate than the competition have offer.
3.Manage your finances
Starting with a strategy will help you keep on track before you ever even pull out the credit card. Determining your monthly income and needed expenses. As part of these monthly expenses, figure in 5-10% of your income to set aside for emergencies, long range savings such as retirement account and short term savings. If you have some savings then you avoid to put large amount of debt on a credit card in times of crisis.
CAUSES of Credit Card Debts
1. Financial illiteracy
Many people don't understand how money works and grows, how t save and invest for a rainy day, or even why they should balance their checkbook. The school don't teach it, your parent may not have sat you down and explained it, but it doesn't matter. You are responsible for your money and your life anyway. Financial mistakes are increasingly expensive and complicated to resolve.
2.Under-employment
People who experienced under employment may continue to think of it as only temporary or if they are coming off unemployment feel a false sense of relief. Yes, you deserve a break, but this is not the time. Get those expenses in line with your current income. Down the road if you increase your income due to more hours, a second job, or a better job, then is the time to start adding in some of the previous spending before you became unemployment.
3.Poor Money Management
A monthly spending plan is essentials. Without one you have no ideas where your money is going. You maybe spending hundreds of dollars unnecessary each month and end up having to charge purchases on which you should have spent the money. Planning is no more difficult than write down your expenses and income and reconciling the two. You will be surprise at how powerful you'll fell when you are making thoughtful decisions about where and when to spend your money.
PREVENTION of Credit Card Debts
1.Credit counseling and debt settlement
Each help clients by educating them in ways to get out of debts and stay that way, but the approaches are significantly different. The objectives of credit counseling is to pay off debts in full by negotiating lower interest rates, while debt companies pay off debts fast by negotiating reductions in the amount owed.
2.Choose a credit card that offer lowest interest rate
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 a far more reasonable interest rate. Credit card companies do not want to lose your business. Nine times out ten they will match or even offer a lower rate than the competition have offer.
3.Manage your finances
Starting with a strategy will help you keep on track before you ever even pull out the credit card. Determining your monthly income and needed expenses. As part of these monthly expenses, figure in 5-10% of your income to set aside for emergencies, long range savings such as retirement account and short term savings. If you have some savings then you avoid to put large amount of debt on a credit card in times of crisis.
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