Credit Card debts: Causes and Prevention

Visa - Master Credit card





I have came across several types of credit card such as gold-master, visa(titanum, classic, gold). Some people might used credit card for immediate installment such as car loan and housing loan. There are few causes and prevention of credit card debts in our daily life.

Causes of Credit Card Debts:

a) Decrease in income - Some groups of people would be bought expensive items when their income reduce. They are leading the debts accumulated until payment has been paid. They are encourage to adjust the debts quickly and get it better.

b) Poor Money Management - Planning your budget is very important as you might not knew where your money spent. It happened mostly for women who like bought expensive things such as branded cosmetics. They might not realised thousand of ringgit had been spent monthly. When monthly statement delivered they only discover that they are over spent and it is too late. The sum that accumulated month by month due to payment due and interest has been charged. There must be a proper spending plan to avoid over budget and money gone.

c) No saving cushion - An easy way to avoid unwanted debts is to prepare for unexpected expenditure by saving living expenses as much as possible. In case one day you are divorce, job layoff, illness and you have money to cover your expenses. It might not caused you financial strain as the debts is increasing by spending too much. Everyone should be saving money and you might need to used it in any emergency matters.

Many people put on emergency bills such as car installment, housing loan and so on. It is because human beings would be faced with a rising cost which is trap them. There are few prevention on credit card debts.

Prevention of Credit Card Debts:

a) Photocopy Bank Offer include Interest and Terms - You might want to write a letter to a credit card company stated you would like swtich competition. As that financial institutions offer a reasonable interest rate and you prefer to be their valued customer. They do not want to lose their business and approved you to get a credit card at once. In fact, they would matched your need and even offer you a lower interest rate.

b) Double Minimum Payment - People would paid extra amount due when they are afford to do so. The balance you paid more the debts is no longer so much that needed to be paid in longer time. You should be noticed that interest charged when longer time taken to make payment. It would be end up with the principal plus an interest charged and you might get panic when deal with huge amount outstanding.

c) Cut Up Credit Card - Many people have been close their credit card account when they are awared that they are unable to pay anymore. They are just stick to one credit card rather than 2 or 3 credit cards. The reason is they do not want to be debtors that owing money to the financial institutions.