Causes and Preventions of credit card debts

“ Wao! The dress is nice. I would like to have one. But I do not have enough cash to pay for it. It is expensive!”
“It’s OK dear. I have credit card with me. I can pay for it. Here you are.”

It’s a conversation between couple and it reflects a true situation of consumers’ purchasing behavior nowadays. The usage of credit card has been common in the society. However, there is another issue arose by the MISUSE of credit card, which is the credit card debt. Some statistic show’s that, even college students are facing credit card debt. This is an unhealthy matter for the society.

The main reason that caused this issue is part of the credit card holders live extravagantly. They can use credit card to purchase whatever they like without having to plan for their budget and knowing how much cash left in their wallet. This is a very dangerous service offered. Most of the people will not be aware that they are spending more than they can earn. Debts will be accumulated from time to time until they become too much to handle if they do not pay the bills in time. Having a credit card in hand makes them more convenient but at the same time, makes them poorer as well as they do not manage their finances effectively.

In order to have a good financial health, few steps should be taken to prevent ourselves to fall into credit card debt.

Manage your finances
First of all, card holders should plan for a budget based on monthly income and needed expenses. As a consumer, we should always be rational and buy only goods that we really need. Always choose the right product at the right price. Besides, we should use the card like cash, not like a credit card. Do not use credit card when it is not needed as we cannot physically feel our charges climbing higher and higher. By practicing this, we could spend our money wisely, avoid extra expenses and at the same time, having some savings.

Limit the credit cards in your wallet
Different credit card comes with different terms and conditions. These terms including vary interest rates, penalties and due dates. Therefore, it is easier to have only one or two cards as it is much easier to remember which card has the lowest rate and make payments on time.

Pay the balance in full and on time
It is recommended to pay the balance in full and do not brought forward the balances. Therefore, we should always ensure that we have sufficient money to pay for the bills before we use the credit card. Furthermore, we can save up money on interest if we could pay before the actual due date. This is because the interest that we pay is calculated based on the average daily balance. Hence, we would only need to pay less interest if we could do so.

By taking these few steps today, card holders’ financial health will have a clean bill of health.