- What is credit card debt?
It’s happened when a credit card user bought items or services by using card system. Debt accumulated by adding some interest rate and penalties when the credit card user did not pay the credit card company for the money that he or she spent.
Causes of credit cards debt - Promotion: Every month, the credit card company will make promotion event to attract more people to subscript a new card. The most popular incentive is zero interest rate. Most of this incentive is only for the first month subscription. Once the special rate end, the interest rates shoot up. So, this made a small debt grow rapidly and becomes a huge debt.
- Spending: BIG SALES, MEGA SALES, STOCK CLEARING and DISCOUNT are common phrases that attract people to spend more. Although the consumer is not affordable to buy the product, the consumer will just can’t miss the promotion. At the end, they will just swap the card and buy that product.
- Missing payment: Most of the consumer did not plan their money usage.
Firstly, they will use their cash to buy items. When they run out of cash, they will use their card without thinking are they able to pay? At the end of the month, the bills arrived at their home. They will have no more cash to pay it. They will just let debt accumulated and pay it next month PLUS some interest and penalties.
Prevention of credit card debt
- Only use cash to buy items or services. Stop spending when you are run out of cash.
- Budget your expenditure. List down all the necessary that you want to buy.
- Think before you buy. Buy it if you are able to pay the bill.
- Only use credit card for emergency.
- Clear all the outstanding debt and cancel the card that you are no longer use.
- Hold only one card. This can reduce risk card being stole.
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