Credit Card debts: Causes and Prevention

A credit card is part of a system of payments named after the small plastic card issued to users of the system. It is a card entitling its holder to buy goods and services based on the holders promise to pay for these goods and services.It is issued by banks, savings and loans, retail stores, and other businesses. It is very useful because it is small and allows card holders need not to bring to much cash on hand.

Therefore, the convenience of the credit card also brings a lot of problems. It is because a lot of people use credit cards as a "crutch." They like to pay the bill using credit card. Because of credit card is issued by banks, so when those card holders pay the bill, the interest are straightly charge into their accounts. Many of people failed to pay the bill so that they have to bear the credit card debt.

Causes of credit card debts

1. The low qualification of application of credit card Compare with 1990's, those people who apply for the credit card must have to achieve the lower salary level which is RM 1,500 per months. But, nowadays the qualification becomes lower and lower.

2. Poor money management
Without money spending plan, you have no idea where your money is going. You may be spending unnecessarily each month.

3. Banking on a windfall
Very often, spending tomorrow's money today is very tempting. It is advisable that don’t spend until you hold an amount of money in hand.

It is a serious issue because the bank will charge interest per month for those cannot settle the credit card debt. So that, those failed to paid debt will feel hard to settle the debt because of the interest that charged by the bank. Prevention is better than cure. How to prevent credit card debt?

1. Prioritize your debt repayment
Credit card users are advisable to pay off your debts to get rid of the highest interest payment first. List all of your credit card debts, and the amount you are paying each month. Pay off the lowest amount first. Then use that money to start paying off the second lowest amount.

2. Move your debts
This is by moving debt from a card with higher annual interest rate to a lower interest rate. This can eventually allow you to pay the lower amount of interest and buy more.

3. Cut up your cards so that you are not tempted to use them
Pick the one with the lowest interest rate and cut up the rest. The one you keep should be deemed an ‘emergency card.”