Credit Card debts: Causes and Prevention

A credit card is a small plastic card which is issued by a bank or a credit union to an individual. With the use of credit card, he or she can borrow money to make any payment. Every credit card is provided with certain features (card type, annual fee, credit limit and interest rate). Credit card, if used properly offers a number of advantages. These include the ease of purchasing goods. Also, some of the credit card offers are cash discounts, bonuses, and even insurance cover. However, credit card has certain disadvantages. One of the major disadvantages is a lot of credit cardholders land into debt and even bankruptcy.

There are just a few of the causes of credit card debts:

1. Poor money management. Not having a monthly spending plan and not keeping track of the monthly bills.
2. Financial illiteracy. Not understand the workings and growth of money; the savings and investments for a rainy day.
3. Less income, same expenses. Keep on spending as much as they got used to regardless of the reduced income.
4. Saving too little or not at all. Saving seems to be a holdover.

In order to enjoy the maximum benefits of a credit card, the user or credit cardholder should understand the terms ad conditions before using the card. There are just a few of the preventions of credit card debts:

1. Be credit smart. If you and only you are ready to assume the responsibility for paying the credit, then only apply for a credit card.
2. Use credit card wisely and sparingly. Keep in mind that paying goods and services using credit card is more expensive than using cash or cheque. Credit payments include interest and other fees. If there is really the need to use credit card, carry only the card that will actually use.
3. Use credit for money emergency only.
4. Avoid impulse shopping on the credit card.
5. Seek credit counseling as soon as the financial problems are on the horizon.

Set your mind -> Resist the pressures of the credit card society (much easier) -> Start to feel the benefits -> Enjoy the process -> Cash convert for the rest of the affluent