Credit Card debts: Causes and Prevention

Credit card is a plastic card which having a magnetic strip that may be used to purchase products and services on credit repeatedly which issued by banks and financial institutions. It is usefulness in establishing your financial independence especially for emergencies. Unfortunately, a lot of people tend to misuse credit cards when they can’t afford something to satisfy their desirable. This is where credit card debt arises where debt increases via interests and penalties that they never perceive the amount used whether affordable or not. Thus, the problems of bankruptcy never decrease but increase gradually in each year.
There are five of the causes of credit card debts that I would like to discuss in the following:

1. Poor money management
Poor money management is one of the bigger causes that why people have accumulated many credit card debts and the increasing of the bankruptcy. Generally, people will likely to keep on spending with using the future money without perceive that they are unable to pay back the debts by using credit cards. Without conducting spending plan and keeping bills or receipts, people will never realized how much their spending on the unnecessary items and the increasing debts and interests should be charged every month.


2. No saving cushion
Nowadays, many people don’t understand how to save and invest for a rainy day. When people using credit cards, they would like to use the future money and have not extra money to save in bank. In this condition, people will be tough to manage their saving as they are spending more than their income. It is very tempting and may found difficulties to pay back the amount since the saving account is negative.


3. Unemployment
Many people lost their job and unable to maintain their living expenses due to the economic depression. They are forced to use the future money to cover their future living expenses by over using credit card. When expenses are not cut down to cover the reduction in income, this may lead to a rise in credit card debts.


4. Gambling
Gambling has become a popular part of entertainments in today. When it becomes addictive then it is hard to stop. Not doubt that, it will lead to financial disaster if borrowing through credit card for gambling.


5. Excessive medical expenses
The cost of obtaining cures and medicine is increasing every year. Normally, credit card becomes one of the sources of fund to pay off the medical expenses if health insurance is not adequate to cover the medical bills. This also will lead to rise in credit card debts.


People should think of the solution to avoid themselves from credit card debts by not keep on blaming the situation. The debts are not a curse and it might be a signal for people who always owe many debts to learn how to responsible in life. There are some tips to prevent credit card debts:


1. Conducting a budget
In order to eliminate the credit card debts, people have to make a budget and follow it. This will prevent from overspending and fall under deeper debt load. In addition, budget planning also can record how much money was spent in order to control the desirable of them. Credit card users also are advisable to pay off the lowest amount first and the following to pay off the second lowest amount. This can allow you to pay the lower amount of interest and buy more.


2. Self control and disciplines
People who using credit card should learn how to have a better self control and discipline so that able to pay back the full amount of debts each month and use in emergencies. People can cut up their credit cards which have the highest interest rate and the lowest one should be deemed an “emergency card”. Moreover, they also can control themselves by limit their credits card amount by stopping them to use the money. This may reduce the expenses more than their budget.


3. Communicating and dealing with creditors
People can address the problem to creditors instantly to investigate whether they could give revised payment arrangement when facing trouble to pay off the huge debts. They also can refer to Fair Debt Collection Practices Act to identify debts problems if the collection of money from creditors is not fair enough.
In my conclusion, using credit card is avoidable unless it should be used for emergencies and you are affordable to paying off the amount due immediately.