Credit card is a card where it entitles the holder to buy goods and services based on the promises to pay for these goods and services. Many people like to use future money (credit card) as they did not have enough cash on hands. This made the numbers of credit card debts increase, thus creating a major problems of bankruptcies each year. This is because many people never realized the consequences of financial and non financial perspectives.Credit card debt can arises from the following:
1.Poor money management
Poor money management is one of the main reasons that causes people to build up their credit card debts. This is because people do not have a proper monthly spending plan and do not keep track of monthly bill payments. People often overlooking on the spending of small items which are useless or inexpensive. Thus, it has lead to a rise in debts by using credit cards.
2.Unemployment
Households are forced to use credit card for groceries, utilities and some other expenses for the purposes to maintain current lifestyle when the main breadwinner of the household has loss his job and could not find a new job during bad economies. This may lead to a rise in debt when expenses are not cut down in line with the reduction in income.
3.Gambling
Today, gambling has become part of entertainments in our life. When it become addicted, it is hard to quit. Thus, it surely lead to a financial disaster if borrowing money through credit card for gambling.
Today, gambling has become part of entertainments in our life. When it become addicted, it is hard to quit. Thus, it surely lead to a financial disaster if borrowing money through credit card for gambling.
4.Excessive medical expenses
Credit card will probably become one of the sources of funds to pay off the medical expenses if health insurance is not adequate to cover the medical bills when your family members suffers serious illness. In United States, almost everyone pays their medical expenses by credit cards to get treatment.
5.Divorce
Fees that must spend for divorce such as attorney, division of assets between husband and wife, proceeds given to children are the way to rack up huge debts by using credit card if it is the gap between the expenses and income. Moreover, it will lead to reduction in income because divorce may force some people to quit their job and to have a walk in other countries.
People should think of the solution to avoid themselves from credit card debts rather than keep blaming on the situation. The debts are not a curse and it might be a signal for people who always owe many debts to learn how to be responsible in life. Thus, the prevention of credit card debts will be discussed in following:
1. Making a budget
We need to have a clear budget plan and need to keep all the receipt of expenses or bills in order to record how much money has been used. This can help us to perceive that we will not overspending on our budget that have set before and prevent from building debts.
2. Self control and discipline
People who are using credit cards should learn how to have a better self-control and discipline in order not to overspend it. People can control themselves by limiting their credits cards amount if they have overspent by stopping them to use the money.
3. Contacting and dealing with creditors
You can address the problem with creditors instantly to figure out whether they could give revised on payment arrangement when you facing trouble on paying off the debts. If the collection money from creditors is not fair, you can refer to Fair Debt Collection Practices Act to solve debts problems.
But as with many things in life, when it comes to credit card debt, prevention is really better than cure. So, the main prevention is aware of the causes of credit card debts and starts to spend less in order to stay with well financial situation.
References:
Top10 Causes of debt
Credit Card Debt-Prevention
1 comments:
I'm agree with the causes you are given, especially gambling not only making themselves suffer, their families also have to suffer with he or she!! So do think about it twice before want to gamble.
Post a Comment