Nowadays, credit card has acted as cash whereby consumers can purchase good or services by swapping the credit card through the electronic verification. It is very convenient by carrying only one credit card rather than carrying bulks of cash in the wallet for the consumers. Thus, it is common to see a person holds more than 1 credit card at the same time. It is shown that many credit card holders have incurred into debts and as a result, it leads to bankruptcy. So, let me share with you the casues and preventions of credit card debts. Causes :
Consumers mostly do not have a monthly spending plan and do not keep track of where the money is going. Without the plan, they are not aware what they have spending on and they may spend on something which are not necessary. 
Income less, expenses high
Many people are spending more than their income where expenses level is higher than income. This is because consumers can purchase goods without paying cash immediately. As a result, consumers tend to spend overlimit and lead to incur on debts.
Missing payment / Late payment
Consumers may think that missing payment may not be a big deal for them. Actually, there is a penalty for the missing payment in the bill which already included. The creditors may also increase interest rate to the default rate. Thus, the higher interest rate increases the debts as well which making it more expensive to carry on a balance.
Prevention :
Budget planning
Create a budget and stick on it. A clear budget that includes monthly bills, food and miscellaneous items can assist in spending wisely with only "NEED" goods and not on "WANT" goods.
Use cash instead of credit card
If consumers purchase using cash, the feeling of tangible cash is running low in their wallet whereby they can know how much cash they are having at the time. So, it might help consumers on controlling on their spending habit.
Pay on time
Make sure you settle the bills on time. This is because paying on time eliminate unnecessary default penalty or higher interest rates. If you cannot pay back the whole balance, you should pay as much as possible, or else the credit card debts will keep on grow up and up.
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1 comment:
well, quite informative..
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