Credit card debt’ is a topic that is often discussed in business and social circles. A large percentage of people are plagued by this bug called ‘credit card debt’. They can’t be blamed for this; therefore, they are easy victims of this mistake.
The main reason behind so many credit card casualties (credit card debt related casualties to be precise) is that many people do not understand the concept of credit cards properly. They think of credit cards as free money that will never be returned. As a result, all the discipline that would have gone into spending hard-earned money is thrown out the window. This means that people overspend and get into credit card debt. They keep spending until they reach the credit limit on their credit cards. Some people even make it a game and consider it a failure (or consider their credit card underutilized) if they don’t reach their credit limit soon. These unnecessary purchases cause them to be unable to pay their credit card bills and end up paying interest on the amount they owe. In this way, their credit card debt continues to grow and they soon find that the interest component has become a regular feature of their monthly spending, even when they are not spending money on their credit cards. This is the latent period of credit card debt. Soon they find that their current credit card is no longer sufficient for their needs and they begin to look for another credit card. With new credit power, they begin to indulge themselves again and follow the “shop ’til you drop” routine. Soon, the credit limit on the new credit card is also reached and they again default on their payments. This is how credit card debt accumulates. Soon, they learn about credit card debt consolidation and other credit card debt elimination techniques. They quickly seize on this credit card debt reduction technique, but not because they really want to reduce their credit card debt, but because of the attractive low APR offers. As if it were a trophy, they went back to building up credit card debt once again. In the meantime, they had been trashing their credit card ratings and they soon realized that no one would lend them money because of their credit history. They could now only get a secured credit card (you put money into your credit account first, and then only you get the privilege of using the credit card for purchases (50-100% of the money). Credit card debt collection agencies, auctioning off their goods and bankruptcy are the next things that hit them and their dreams of running are blown away in a heartbeat.
The moral of the story – “understand the concept of credit cards and take credit card debt seriously”.