Personal Finance Knowledge - Discover The Reasons For Credit Card Debt
'Credit card debt' is a much discussed topic in the commercial and social circles
. A big section of the population has been bit by this bug called 'credit card debt'. Can't blame them much; as such, it's pretty easy to fall prey to this bug.
The main reason for so many credit card sufferers (rather credit card debt related sufferers) is that the theory of credit cards isnt understood properly by lots of people.
They treat their credit card as if it was free money that is never to be returned. So all the restraint, which would otherwise have been exercised with spending hard-earned funds, goes out the window.
This means people spend too much and run into credit card debt. They keep spending till they reach their credit card limit. Some people treat it like a game and think its a defeat (or consider their credit card under utilized) if they don't hit their credit limit quickly enough.
These needless spends result in a condition where they are not able to repay their credit card bills resulting in them paying interest on the amount they owe. So the debt on their credit card keeps building up and they speedily find that the interest on their card has become a normal feature in their monthly expenses, even if they dont use their credit card at all.
That is credit card debt on the loose. Soon they learn that their present credit card is not sufficient for their needs and start looking to get another one. With the new credit, they start again and follow a 'shop till you drop' routine. Soon their new credit card limit is also reached and they again default on payments.
This is how you get into serious credit card debt. Quickly they learn about consolidating their credit card debt and other techniques to eliminate credit card debt. They are quick to grasp such techniques to reduce their credit card debt, but that's because of the attractive low APR offers and not because they are serious about reducing their credit card debt.
As if it were loot, they return to building up their credit card debt. All the while they are damaging their credit card rating and they soon understand that no one will lend them capital because of their credit history.
Now they can only get a secured credit card (that is they first deposit money into their credit account before they get the privilege of spending it using their credit card.
The next thing that happens to them are the Credit Card Debt Collection Agencies, who auction off their goods. Bankruptcy happens next and their spending spree is stopped in its tracks.
The moral of this account is this - Be aware of how credit cards work and treat credit card debt with all earnestness.