Credit Card

The Leading Causes of Credit Card Debt

Americans across the nation are struggling with credit card debt, something that can be easily avoided if given the right training. Unfortunately, a lot of people use their credit cards irresponsibly and end up having to pay dearly for it in the long run. If you own credit cards, it’s important that you learn from the mistakes of others, so that you don’t do the same. The first step is to understand why credit card owners go into debt in the first place. Credit card debt is one of the hardest to get out of because it is constantly accumulating interest each month, pushing you down deeper and deeper into debt.

Bad Economy

One of the number one reasons for credit card debt has to do with a failing economy. When the economy starts to fail, you and your family could end up suffering. You could end up losing your job or getting your hours majorly cut, making it difficult to make things meet. And when you have credit card bills to pay on top of that, you’re going to end up piling up debt from credit cards that you’re no longer able to afford.

Paying for Emergencies

Another reason people go into debt with credit cards is because they use it to pay for emergencies. In most cases, the individual is unable to afford the emergency, but uses their credit card anyway. Then when the bill comes, they can only pay the minimum each month, making it nearly impossible to ever pay off the credit card debt. It can be hard to not swipe your card for emergencies, especially if it involves someone becoming ill or your car getting totaled in an accident. To prepare for such emergencies, you should obtain health insurance and full-coverage auto insurance with reasonable deductibles. You can also save up cash on the side to be used for any emergencies that may pop up.

Keeping Up with the Jones’

Your peers can play a part in your credit card debt accumulation. Trying to be like your friends and/or family when it comes to purchases could leave you in a tight spot. If you can’t afford the purchase outright, then you shouldn’t be paying for it with your credit cards. Those who heave wealthier friends and family should accept their differences and be satisfied with what they’re able to afford, otherwise they could end up facing bankruptcy and losing everything they’ve ever gotten.

Society’s Bad Habits

Society is another factor that can make people spend money on their credit cards ruthlessly. The media (television, movies, music, etc.) tells us that we have to spend money to be happy and some of us believe that. Owning lots of possessions or having bigger, newer and better things is what life is all about. This frame of thinking will quickly get you into debt that is easy to get into and difficult to get out of.

Making Bad Financial Decisions

Overall, if you aren’t good at making financial decisions, you probably shouldn’t own a line of credit. You’ll only be setting yourself up for financial disaster. At the end of the day, credit card debt is mostly the blame of the credit card holder. Even if you lost your job, you should be able to put down your credit cards and not owe too much money. If you owe a lot at that moment, then you were already spending recklessly. It’s important that you identify the source of the problem and nip it in the bud as soon as possible. Whether you’re looking to have the best things in life, get things for your children and spouse or live it up because you only live once, you should never do it with a credit card.

Getting Out of Credit Card Debt

If you’re one of the many consumers who have dug themselves into a well of debt, you’re going to need to look for options on how to climb out. There are a variety of debt relief services and methods that you can use to get your life back on track. Here is a couple:

  • Debt Management: This consists of hiring a company to negotiate with creditors on your behalf to lower you interest rates and monthly payment. At the end, you’ll have one monthly payment that is dispersed across multiple creditors.
  • Debt Consolidation: This is a loan that is used to pay off all of your debts.
  • Debt Settlement: Uses services of a counselor who negotiates a settlement amount that is 50% or more of the price that was previously owed.