Credit cards can be very convenient when we purchase things from the grocery, from the bookstore, at the auto shop, or online stores. With one swipe or a few clicks, the transaction is done. Collectively, these swipes of convenience annually amount to $8 Trillion for Americans. Balances for credits can go spiral and debt accumulates faster more than we can imagine. If you are just starting out and thinking about applying for a credit card or loan or already have a credit history, it is important to understand what causes credit card debts.
1) Less income, more expenses
Too often we delay bringing expenses in line with a reduction in income for a host of good reasons and let debts fill the gap. It so happens that the main breadwinner of the household loses his job but monthly expenses are not cut down in line with the reduction in income. This obviously leads to a rise in debt. The family is forced to use their credit cards for groceries, utilities and so forth.
Too often we delay bringing expenses in line with a reduction in income for a host of good reasons and let debts fill the gap. It so happens that the main breadwinner of the household loses his job but monthly expenses are not cut down in line with the reduction in income. This obviously leads to a rise in debt. The family is forced to use their credit cards for groceries, utilities and so forth.
2) Poor money management
Poor money management is one of the best reasons why so many families accumulate lots of debt. Without a monthly spending plan, you will have no idea where your money is going. You might be spending hundreds of dollars every month towards items that are useless and have no value in your life, yet you do not realize it. While your money is going towards purchasing useless items, you might also be charging your necessary purchases on your credit card, forcing you to pay interest on these purchases every month.
Poor money management is one of the best reasons why so many families accumulate lots of debt. Without a monthly spending plan, you will have no idea where your money is going. You might be spending hundreds of dollars every month towards items that are useless and have no value in your life, yet you do not realize it. While your money is going towards purchasing useless items, you might also be charging your necessary purchases on your credit card, forcing you to pay interest on these purchases every month.
3) Underemployment
People who experience underemployment may continue to think of it as only temporary or if they are coming off unemployment feel a false sense of relief. But if you are underemployed meaning you are not getting enough working hours at your job, you should also cut down on your lifestyle to match your current income. Forget about driving a BMW if you are working only 30 hours a week at the Home Depot making minimum wage. However, if you are a Financial Controller with a local Corp. then you should think about driving a BMW.
People who experience underemployment may continue to think of it as only temporary or if they are coming off unemployment feel a false sense of relief. But if you are underemployed meaning you are not getting enough working hours at your job, you should also cut down on your lifestyle to match your current income. Forget about driving a BMW if you are working only 30 hours a week at the Home Depot making minimum wage. However, if you are a Financial Controller with a local Corp. then you should think about driving a BMW.
4) Big medical expenses
Nowadays, almost all doctors accept credit cards. If you think it's for convenience, think again. The medical industry wants to get paid at the time service is rendered. They know that if they don't, the chances of their getting paid drops. This means more debt for you, less for them. To be fair, they are not in the lending business, but this only masks a bigger problem. While you need treatment now, you do not have the cash. So what do you do? You will use your credit card because you do not have enough savings in the bank.
5) Gambling
Many people put not only their own disposable income on the line when gambling, they also borrow loans to gamble! You see, Casinos would not exist if every one person won money in it. Probably 1 in every 100 people wins money in the casino over the long term. Another huge boom in the gambling industry is the emergence of Party Poker and online gambling websites that are illegal in the USA. Online gambling is so easy that you don't even have to step out of your house, you can do it right in your bedroom with a small PC!
Credit card debt is the main contributor to personal debt and cause for many financial problems. Once your credit card debt starts growing it becomes more and more difficult to eliminate it and become debt free. Everyday you get credit card offers, by mail, on the internet, etc. But you need to act consciously and opt out if you are not sure you will be able to afford it or if you do not trust yourself with it. If you know you overspend and have no control on your expenses, it is wise to start modifying such behaviors and avoiding getting extra credit cards would be a wise start.The following are some suggestion to prevent credit card debts.
Many people put not only their own disposable income on the line when gambling, they also borrow loans to gamble! You see, Casinos would not exist if every one person won money in it. Probably 1 in every 100 people wins money in the casino over the long term. Another huge boom in the gambling industry is the emergence of Party Poker and online gambling websites that are illegal in the USA. Online gambling is so easy that you don't even have to step out of your house, you can do it right in your bedroom with a small PC!
Credit card debt is the main contributor to personal debt and cause for many financial problems. Once your credit card debt starts growing it becomes more and more difficult to eliminate it and become debt free. Everyday you get credit card offers, by mail, on the internet, etc. But you need to act consciously and opt out if you are not sure you will be able to afford it or if you do not trust yourself with it. If you know you overspend and have no control on your expenses, it is wise to start modifying such behaviors and avoiding getting extra credit cards would be a wise start.The following are some suggestion to prevent credit card debts.
1) Choose your credit card wisely
The first thing to preventing credit card debt is to choose your credit card cautiously.The main item to look at is the interest rate; you should try to find the lowest rate available. To do so you can join one of those internet companies that offer reviews on many credit card offers, these sites also offer direct links to the credit cards application so actually you will get all the work done for you.
The first thing to preventing credit card debt is to choose your credit card cautiously.The main item to look at is the interest rate; you should try to find the lowest rate available. To do so you can join one of those internet companies that offer reviews on many credit card offers, these sites also offer direct links to the credit cards application so actually you will get all the work done for you.
2) Setting a budget
Create a budget and stick to it. By setting a clear budget that includes all of your monthly bills, food, entertainment and miscellaneous item, you can learn where your money is going and how to save and reduce your expenses. This will help reduce your credit card debt.
Create a budget and stick to it. By setting a clear budget that includes all of your monthly bills, food, entertainment and miscellaneous item, you can learn where your money is going and how to save and reduce your expenses. This will help reduce your credit card debt.
3) When you can, use cash, not credit
If you carry a balance, use your card for as little as possible. When you write checks, use a debit card or fork over cash for each purchase, you will be more conscious of your spending and will end up spending less.
If you carry a balance, use your card for as little as possible. When you write checks, use a debit card or fork over cash for each purchase, you will be more conscious of your spending and will end up spending less.
4) Pay more than the minimum payment each month and pay on time
Never pay the minimum unless you have no other choice, and make sure to pay more as soon as you can. If you are constantly making late payments because the bill is due before your paycheck arrives, ask your credit card company if your billing date can be moved. Often times they will be happy to change it to ensure that you pay the bill on time.
Never pay the minimum unless you have no other choice, and make sure to pay more as soon as you can. If you are constantly making late payments because the bill is due before your paycheck arrives, ask your credit card company if your billing date can be moved. Often times they will be happy to change it to ensure that you pay the bill on time.
5) Negotiate with the credit card companies
The amount of credit card debt has made creditors realize that if they want to get any money back, they have to make deals! If a card charges an annual fee, ask that it be removed. Many cards don't charge a fee, so you can always switch to one of these cards. Most credit cards will remove the fee if you simply ask.
The amount of credit card debt has made creditors realize that if they want to get any money back, they have to make deals! If a card charges an annual fee, ask that it be removed. Many cards don't charge a fee, so you can always switch to one of these cards. Most credit cards will remove the fee if you simply ask.
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