Credit Card Debts : Causes and Prevention

The above statistic is get from Malay Mail. (read more)

Credit card services are intended to make our life easier; however it had misuse by public and causes them facing a lot of credit card debt. The following is the causes and prevention on credit card debts.

1. Lack of financial management
This is the most common mistakes done by credit card holders. Financial management can let you determine how much you can spend such as prepare a budget for bill payment. However, due to poor financial management (i.e. lack of cash) had delayed their monthly payment and been charged a high late fee at higher rates.

To ensure you won’t be missing any payment, you can set up an automatic bill pay transfer to settle your monthly bill. As a holder, you can always remind yourself for each payment due by keeping a calendar in your mobile phone.

2. Excessive spending
Most of the time, you might attracted by some items and will just take out the credit card and swipe it without considering whether is it needed. This is very dangerous if you keep buy something beyond your means because this will make you become a credit card slave.

Again, please always make a budget on what actually is your necessary expense for each month and stick to it. Always ask yourself, “is this price is within my budget? Or do I really need it?”

3. Income level had been reduced
Before this, you might be a top salesperson who is earned a high commission. However, due to recession, you are unable to gain as much income as before. If you do not trim excess expenses to match with your new income, you might in trouble to settle your monthly charges.

Therefore, you are advised to create a new budget according to your new income and cut down any unnecessary expenses to get your spending under control.

4. Rely too much on using credit card
You might think that the easy way to make payment for the expensive stuffs is just pull out a credit card and swipe the payment rather than pay cash. But if you do not have much money in your wallet, it indicates that you do not have much money to settle your debt later too.

This behavior will make you trap into debt, therefore, always think twice before purchase and be aware that cash in wallet indicate how much you are able to pay for the bills when it comes to due.

reference: http://www.3debtconsolidation.com/creditcardmistakes.html