Credit Card debts: Causes and Prevention.

Credit card debt is an example of unsecured consumer debts. Credit Card Debt results when a client of a credit card company purchases an item or service through the card system and he or she does not use the card in a proper way. One of the reasons that consumer easily get into credit card debt is the flexibility of credit card provided. For example, credit card allows people make large purchases such as cars or luxury products without paying lump sum at the time they purchase. In other words, it allows consumers use the products or services now and pay later. Therefore, it causes consumers purchase something with credit card without proper consideration before buying. In addition, the due date for credit card payment is up to 12 months, the rest of its existence they end up paying off interest. The debt can be accumulated and increased via interest and penalties charged by the credit card company when the consumers do not pay for the money they have spent. Credit card also offers “incentive” benefits such as the reward program and etc. Credit card’s holders can use their points to get some rewards such as free travel, voucher or any other program.

Credit card can be a great convenience and provides the safety of not dealing with cash, which is more easily lost. Furthermore, consumers feel safety by using credit card to make purchases as they are offered protection under the Consumer Credit Act and they can often get the money back in a fraudulent purchase that any other payment method is unable to provide such protections. Credit Card Company holds liability for unauthorized transaction. Consumers need not bear the huge amounts of lost if their cards are lost or stolen and somebody racks up big charges. They are only liable for $50 even though they do not notice it for 90 days or more or report it immediately. Besides, credit card Company also liable for transaction which is still in disputes process. Consumers can simply contact their credit card company to put a hold on payment if they realized something goes wrong on the payment. They will then follow a dispute process but they would not be liable for the transaction until everything is settle. Overall, the credit card service provides many advantages for the consumers and causes them rely on credit card to make purchases without aware of the credit card debt.

There are some ways to control the debt. Firstly, break the habit of paying only the minimum required of each month. Credit card holders are advised to pay more than half because the longer time they take to repay the charges, the more interest they make and the less cash they have in their pocket. Besides, consumers should check on their outstanding balances regularly instead of check the balance once for a month. It’s too late for them to regret if they have spent too much and out of their ability to pay off the balances. Consumers should eliminate emotional shopping to avoid overspend. They can improve their self disciplines by better management of financial and plan for every significant expenses if possible. In addition, they can try to limit the number of credit cards they possess and the way they use the credit cards. This is because the more credit cards they have, the more they will spend.

Although credit card brings usefulness to the card holders in some ways, it always carries debts at the same time. Therefore, the credit card holders should use the card in proper way so that they can always stay far from the credit card debt.