Credit card has commonly been used in our life, not only adult but also for student. Undoubtedly, it has given a lot of conveniences to its users. However, in certain circumstances, it creates irritations. Put aside credit card fraud which is a serious crime, the credit card debt has become a severe issue and it is the major cause of bankruptcies each year.
Causes:
Missing payments or late payments
The fastest way to get into credit difficulties is by not repaying the minimum payment required, over the limit fees, high annual percentage rates, and universal default. Debts accumulate increase with interest and penalties for late payment had made the total amount due become larger. Even worse, cardholder will be forced to go bankrupt.
Poor money management
Poor money management is one of the best reasons why so many families accumulate lots of debt. Not having a monthly spending plan and not keeping track of the monthly bills makes one unaware of where the money is going. While the money is going towards purchasing useless items, he might need charging the necessary purchases on credit card.
No saving cushion
When people using credit cards, they would like to use the future money and have not extra money to save in bank. When people are spending more than their income, they will be very hard to manage their savings accounts. Besides, the important topics such as saving and investing one’s personal finances are not taught in school. People who are lack of such knowledge may easily become the next victim of credit card debt.
Prevention:
Making a budget or financial planning
The first step in setting up a budget is 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 a retirement account and short term savings. This can help us to perceive that we will not overspending our budget that we have set before and prevent from the debts. Use the card to obtain a purchase that you can afford provided you can pay off the cost over time or spend by using a debit card.
Pay on time
Punctually make the payment to anyone include car and house payments to avoid raising your interest rate if you are late paying any creditors. Besides, you need to pay at least more than required minimum payment for emergency fund or you can set up a Direct Debit for the minimum amount as much as possible of the remaining balance to keep it low.
Early education
The best method for prevention is teaching your younger generation all about money before they even qualify for a credit card. Let they know the causes well and how to effectively manage their financial by using the credit card. Related Link:
Causes:
Missing payments or late payments
The fastest way to get into credit difficulties is by not repaying the minimum payment required, over the limit fees, high annual percentage rates, and universal default. Debts accumulate increase with interest and penalties for late payment had made the total amount due become larger. Even worse, cardholder will be forced to go bankrupt.
Poor money management
Poor money management is one of the best reasons why so many families accumulate lots of debt. Not having a monthly spending plan and not keeping track of the monthly bills makes one unaware of where the money is going. While the money is going towards purchasing useless items, he might need charging the necessary purchases on credit card.
No saving cushion
When people using credit cards, they would like to use the future money and have not extra money to save in bank. When people are spending more than their income, they will be very hard to manage their savings accounts. Besides, the important topics such as saving and investing one’s personal finances are not taught in school. People who are lack of such knowledge may easily become the next victim of credit card debt.
Prevention:
Making a budget or financial planning
The first step in setting up a budget is 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 a retirement account and short term savings. This can help us to perceive that we will not overspending our budget that we have set before and prevent from the debts. Use the card to obtain a purchase that you can afford provided you can pay off the cost over time or spend by using a debit card.
Pay on time
Punctually make the payment to anyone include car and house payments to avoid raising your interest rate if you are late paying any creditors. Besides, you need to pay at least more than required minimum payment for emergency fund or you can set up a Direct Debit for the minimum amount as much as possible of the remaining balance to keep it low.
Early education
The best method for prevention is teaching your younger generation all about money before they even qualify for a credit card. Let they know the causes well and how to effectively manage their financial by using the credit card. Related Link:
http://www.novanthealth.org/eap/daily_issues/credit_card_debt.jsp
http://www.credit-land.com/articles/articles_page_68600_1881780_120.php
http://www.ehow.com/how_2038727_avoid-credit-card-debt.html?
