Credit Card debts:Causes and Prevention

Credit card debt is an example of unsecured consumer debt. It is like gaining weight - easy to get; hard to lose. But losing weight is not impossible; neither is getting out of debt. Owing a lot of credit card debt is not uncommon. Many consumers use credit cards as a "crutch." If they can't afford something they really want, they charge it. When it comes the time to pay the bill they are only able to make the minimum payment and soon find that their balances are increasing, which causes even more frustration and stress.This is where credit card debt arises where debt accumulates and increases via interest and penalties.

Causes of credit card debts:

1) Poor money management- Without monthly spending plan, you have no idea where your money is going. You may be spending unnecessarily each month and end up having to charge purchases on which you should have spent that money.

2) Banking on a windfall- Spending tomorrow's money today is very tempting. Especially if you believe that tomorrow will come no matter what. It is better don't spend the money until the check clears.

3) Financial illiteracy- Many people don't understand how money works and grows, how to save and invest for a rainy day, or even why they should balance their checkbook. You are responsible for your life and your money anyway. Financial mistakes are increasingly expensive and complicated to resolve. Get educated and get in control.

Prevention of credit card debts:

1) Set up a budget and stick to it. Be realistic about your expenses and your financial needs, then draw up a detailed monthly plan.

2) Cut up your cards so that you are not tempted to use them. Save one card for emergencies.

3) Get a low interest credit card if your credit card's interest rate is excessive. The better your credit, the lower the rate for whichy you will qualify.

4) Carry a credit card balance for no longer than six months. Beyond that point, the compounding of simple interest can produce a very expensive balance to pay off. If it helps, think of your credit card balance as a snowball that grows larger as it rolls downhill.

5) Be aware that balance transfer credit cards' teaser rates won't last forever. Six months is common now. The "normal" rate will return sooner than you think, so use that interest-free period to aggressively pay down balances.

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