Credit Card debts: cause and prevention

Credit card is a card issue for issuer leads money to the consumer to pay later to the merchant. When it is used properly is convenient. However, if abused, credit card can be the start of a years-long nightmare and stress.

Causes

Credit card debt can be causes by carrying a balance, though, is very costly. There will have high interest rate and minimum payment rate per month (usually about 2% of the balance).

Second causes are having a poor money management. Holders might have debt with the card issuer which is over their ability to pay. A monthly spending is essential to acknowledge holders where the money is going. They may be spending some unnecessarily money each month and end up having to charge purchases on which should have spent that money.

Beside this, saving too little or not at all also is one of the causes of credit card. The simplest way to avoid unwanted debt is to prepare for unexpected expenditure by saving three to six months of living expenses. With saving, job layoff, illness and so on will not cause immediate financial strain and increase of debt.

Prevention

The prevention for credit card debt is establishing a budget and follows that budget. For instance, don’t be tempted to charge plasma TV to credit card when haven’t budgeted for it this months.

Carry a credit card balance for no longer than six months. This is due to simple interest can produce a very expensive balance to pay off. It is help credit card balance getting more.

Beside apply a credit card, when you credit card interest rate is excessive try to get a low interest credit card. The better the credit card, the lower the rate for which you will qualify.