Credit Card Debts: Causes & Prevention

Credit card debt is a financial worry for many people. Excessive credit card debt can cause a poor credit rating, bankruptcy and subjection to high annual interest rates. There is several ways cause of consumers overspent on credit card.

Firstly, reduce of income or same expenses is one the causes of consumers overspent credit card. For example, we often delay bringing expenses in line with a reduction in income for a host of good reasons and let debt fill the gap. The sooner we adjust to our new reality, whether it be temporary or permanent, the better off we'll be.

Another cause of credit card debt is underemployment. People who experience under employment may continue to think of it as only temporary or if they are coming off unemployment feel a false sense of relief.

Saving too little or not at all also cause of overspent by consumers. The simplest way to avoid unwanted debt is to prepare for unexpected expenditures by saving three to six months of living expenses.

Gambling is considered as the cause of debts. It can be addictive, hard to stop and loans are freely available. Gambling establishments may be the only place we can mortgage our house while intoxicated and have it be legal.

However, if we manage our credit card well, we can avoid these problems.

Step1: Limit the number of cards that we have. If our cards offer low interest balance transfers, transfer the balances from our other cards onto the card with the lowest rate.

Step2: Pay at least twice the minimum. Paying the minimum will prevent us from paying off the credit card for many years.

Step3: Renegotiate our APR at least twice a year. Give a call to our credit card company and speak to a representative to see if we are eligible for a lower APR.

Step4: Stop charging everything. An effective way to manage a credit card is to charge only things that we can afford to pay off at the end of the billing cycle.

Step5: Try to pay off the balance during the interest free period. If our credit card offers an interest free promotional period, make the most out of it by paying off any debt that we have accumulated by the end of the period.
Step6:　Look for a rewards card. These cards allow us to get merchandise from our credit card company.