Credit card is represented an account that extends to consumer, allowing consumers to purchase items while deferring payment, and allow consumer to make payment to multiple vendors at the same time. Holders are charged high interest on unpaid balance. For example, visa or master card.
Credit card debt is like gaining weight - easy to get; hard to lose. But losing weight is not impossible; neither is getting out of debt. In the same way that you can shed those extra pounds, you can get yourself out from underneath all that debt and
avoid bankruptcy. It takes hard work, discipline, and getting the right kind of help. Credit card debts occur when he or she unable to pay that money they have been spent. The consumer did not settle the bill on time, it will charge as late payment and cause credit card debts increasing.
Causes of Credit Card Debts:1)
Unlimited spending
Poor for manage the money or unavoidable spending money will cause the larger debts. Especially, it is happening for woman. The woman who likes to spend at the fashion such as buy new branded shoes, handbag and shirt. At the ended of the month, they only realized that they spend more than their budget. The sum that accumulated month by month due to payment due and interest has been charged. There must be a proper spending plan to avoid over budget and money gone.
2) Saving too little or not at all
The simplest way to avoid unwanted debt is to prepare for unexpected expenditures by saving three to six months of living expenses. With a savings cushion in place, a job layoff, illness or divorce will not cause immediate financial strain and increase debt. You always hear, "Pay yourself first." Do it and it will grow and be there when you need it. No one has ever regretted having a savings cushion.
3) No money communication skills
It is important to communicate with your spouse or significant other and your children about finances. Keep the lines of communication open and discuss financial goals and spending styles. If you are married to a spender and you are a saver, you will want to map out a strategy for you both to get what you want. Know what credit accounts you each have and promise each other to be honest about what each other spends. Many people find out that their spouses have racked up thousands of dollars in credit card debt and they had no idea that the accounts even existed. This often leads to number 2 above.
4)Medical expenses
Gaps in coverage, lapsed policies and increasingly costly alternatives make this a popular category. Just about every doctor I know now takes credit cards. If you think it's for convenience, think again. The medical industry wants to get paid at the time service is rendered. They know that if they don't, the chances of their getting paid drops. This means more debt for you, less for them. To be fair, they are not in the lending business, but this only masks a bigger problem
Prevention of Credit Card Debts:
1)Think before you act
To avoid falling into that trap, take a hard look at your finances and determine how much you can realistically afford to pay each month. Rhode suggests that people track their spending every day for a month to get a firm handle on where their money is actually going.
"People will save 20 percent just writing down where their money goes," he says. "Because they will start cutting back."
After tracking their spending, people can better decide how much they can afford to pay toward credit card debt. Experts point out that just $50 more a month can make a big difference.
If logging expenses for a month doesn't turn up additional money try these tips for saving $50 a month from Consumer Credit Counseling Service:
· Brown bag 10 lunches per month.
· Have movies and popcorn at home instead of going out.
· Use coupons for groceries and buy store brands.
· Make pizza at home instead of ordering out.
· Buy in bulk and freeze dinner entrees.
· Give handmade cards and gifts.
· Shop at consignment, thrift and discount stores.
2)Pay more than the minimum
Once you start paying more than the minimum, the debts start to disappear. Paying just the $60 minimum payment on a $3,000 credit card balance would take eight years to pay off and cost a person a whopping $2,780 in interest. By paying an additional $50 a month, the debt would be paid off in three years and they would be spared $1,800 in interest charges. Use Bankrate.com's credit card minimum payment calculator to see how increasing your payments will cut your time in debt.
3)Cancel Credit Card
Many people have been close their credit card account when they are awared that they are unable to pay anymore. They are just stick to one credit card rather than 2 or 3 credit cards. The reason is they do not want to be debtors that owing money to the financial institutions.
4)credit counseling and debt management agency
Bank Negara Malaysia (National Bank of Malaysia) has establish the Credit Counseling and Debt Management Agencyto provide counseling and advice on financial management, debts management programs and financial education for free of charge such as:-
- Financial education on the responsible use of credit and basic money management skills
- Counselling and advice on financial management, including financial budgeting to manage expenses
- Debt management programme to assist financial consumers to regain financial control
As a conclusion, i hope that all people realise what is the way to prevent card credit debt in order to avoid such debt occur.
Mobile Money also reduce the problem of consumers having to que for long hours to make a payment such as telephone bills and electricity bills. With Mobile Money, payments of the bills can be done anywhere and anytime with just a single SMS made through the mobile phone. Consumers are also provided a Refund and Reversal Feature where consumers are allowed to do reversal (within same business day) and refund (within 10 days from transaction date). This is to ensure that the consumers are protected if the are any wrong in making a transactions.
