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Credit Card Debt : Causes and Prevention

Friday, June 27, 2008


Credit card is defined as any card that may be used repeatedly to purchase product and services on credit which issued by banks and financial institutions. Credit cards provide us with the added security and ease when shopping and traveling but we tend to misuse them and may lead to credit card debt. When properly used, is an extremely convenient tool.


Now, I would to share some causes of credit card debt…The major factor that causes credit card debt is many credit card users only pay the interest and the minimum amount of principal when the debt is due, thus never fully repaying the entire sum. Debt accumulates and increases via
interest and a penalty when the consumer does not pay the company for the money he or she has spent is the second major factor that causes credit card debt nowadays.


Thirdly, with prices of goods and services going up and not the income, more and more Malaysians are forced to spend beyond their earnings. Thus, they will use credit card to purchase goods and services and unable to pay back the expenses. Fourth, with no savings, people can also be sucked into credit card debt by unemployment. They will use the credit card to cover basic living expenses and may found difficulties to pay back the amount.



Let me share some tips to prevention credit card debt with you all. First, if you find yourself making interest payments every month on your credit cards, the first step is to assess your income and expenses. Total your monthly expenses and subtract them from your income. This is your disposable income after expenses, and also the amount you have each month to use as you deter mine.


The next step is to stop charging items on your credit cards and pay cash for items you must buy. Then analyze your credit card debt, pay credit card debt with highest rate of interest in priority. Use your disposable income to completely pay off the card with the highest rate. Once that card is paid off, close the account and destroy the card. Then focus your attention on the next card, and do the same until all of the debt on your cards has been completely paid off.

Finally, just use one or two cards and use them as a financial tool. Remember that a credit card is not the same as free money. If you still have problem, leave you credit card at home while you are shopping.

Conclusion, credit cards should be used for emergencies only, unless you plan on paying the entire balance off immediately. Never pay the minimum amount due unless you truly can’t afford any more.
posted by Ang Chong Li, 8:04 AM

3 Comments:

Has anyone heard of Credit Card Zappers?

They are supposed to be able to knock interest and other fees off your card, even if you're not behind on payments.
commented by Blogger Unknown, June 27, 2008 at 1:18 PM  
Credit card debt is on its all time high with today's economy. Hopefully people can obtain the help they need to get out of debt. Thanks for the article!
commented by Blogger styleinfluence.NET, June 29, 2008 at 9:19 AM  
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commented by Blogger Jeny Wells, September 2, 2008 at 3:28 AM  

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