Credit Card debts: Causes and Prevention

what is credit card debt?
Nowadays, people like to apply credit cards because when go out we no need bring so much cash,we just show them the credit card and we can use it to pay for what we need to buy, very easy and convenient.
Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards.Debt result when a client of a credit card company purchases an item or service through the card system.



causes:
How credit card debt is accumulated?
It's debt accumulated by the consumer that creates a risk for the credit card issuers as no collateral or assets are held against the borrowed funds. Debt accumulates whenever a card holder purchases a service or product through the card. As the consumer purchases more and more goods, the credit card continues to accumulate a debt balance until the credit limit has been reached. Credit limits vary among cards and individuals, as the limit (much like the interest rate) is directly associated with the card holder's credit history. If charges are built up on the card(s) that go over the credit limit. Over-limit charges add to credit card debt and may be subject to interest accrual. Debt increases via interest and penalties when a consumer does not pay their credit card bills on the specified billing cycle. When a payment billing cycle is missed by the card holder, a late payment fee will be incurred. The late fee can be anywhere from $10 to $50 and increases the debt load of the consumer. All missed payments are reported to the credit bureau for filing, affecting the card holder's credit score. If subsequent billing cycles pass and the payments continue to be delinquent, the card holder may be affected by universal default.

Prevention:

• Step1:

Use the calculator, figure out the expenses and incomes. Then list out the fixed expenses such as mortgage, car payment, house insurance, car insurance, etc... We have to figure out where the money is going, and how much is left.

• Step2:

Make a tighter budget for expenses. Cut down in areas where we can cut down.
For example, if we are eating out five times a week, make it two times. If we leave lights on in every room of the house, turn them off! Saving a bit here and a bit there, will add up to big numbers.

• Step3:

Figure out which credit card has the highest interest rate! Try to pay it off first. Add an extra $10 or $20 dollars to it a month to speed up the process if can.

• Step4:

If we could transfer part of the balance from the higher interest company to another, then make the transfer. Be sure to ask how much the fees for transferring will be, and negotiate with them. Sometimes, it is not worth it if the fees are high, and if we don't ask, they won't tell us! The fees will just appear on our statement, and will knock us socks off.

• Step5:

Keep only one credit card for emergency, and cut off the rest. We do not have to cancel all the accounts, just cut them, and put them away. Make sure our emergency usages are actually emergency! our commitment to eliminate debts depends on us.

• Step6:

Use cash for everything! If we do not have the fund for the purchase, then do not buy it.

• Step7:

We can get out of credit card debts with our commitment, determination, and stick to a tight budget. Cut out coupons, use coupons, shop smartly, buy only sale items, and decrease on our spending in any way that we can think of.