Credit card debts : causes and prevention

Credit card debt is an example of unsecured consumer debt. Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.

The results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies. Being late on a payment is sometimes referred to as being in "default". The late payment penalty itself increases the amount of debt the consumer has. When a consumer has been late on a payment, it is possible that other creditors, even creditors the consumer was not late in paying, may increase the interest rates the consumer is paying.

Causes

*Poor Money Management.

A monthly spending plan is essential. Without one you have no idea where your money is going. You may be spending hundreds of dollars unnecessarily each month and end up having to charge purchases on which you should have spent that money. Planning is no more difficult than writing down your expenses and income and reconciling the two. You will be surprised at how powerful you'll feel when you are making thoughtful decisions about where and when to spend your money.

*Users' attitude.

Users' attitude is also another factor that contributes to credit card debts. When users do not have self-discpline, he or she will be easily lured towards sales. They will tend shop and buy impulsively. This is because they do not want to miss he chance of grabbing the items at the minimum price.At the end of the day, when the bill arrives, they will be shocked and will only realize that they had over-spent and do not have sufficient money to pay off the bills and they will have to say "HELLO!" to debts.

Preventions

*Budgeting

A budget is your best weapon against debt. If you realize in time that your credit card debt is getting out of control and you can manage to stick to a strict budget, you should be able to get out of credit card debt with ease.
This is a good time to cancel all credit cards you can no longer afford so you can stop using them and start paying them off. If you can manage to pay off double your minimum payment your balance on that card will disappear within a couple of months. Checking for erroneous negatives points and fraudulent purchases is also quite essential.

*Debt consolidation program
A debt consolidation service will be able to renegotiate with your creditors getting you lower rates and smaller payments. All of your bills will be consolidated into one monthly bill so its hard to forget to send in. Debt consolidation programs will be able to make it easy for you to pay off your debts so you can start saving again for the future. A good debt consolidation service will be able to get late fees and other payments wiped from your credit history and even your current balance.

*Consildate your debt on your own

By paying off all your debts with a single low interest credit card is a great way to cut back on payments and late fees. You can even go as far as calling up the creditors and requesting the the removal of late fees and request to cancel as well. There's a 50% shot you may be able to get some or all of the late fees wiped from your record. And you can then cancel your cards even if they have a unpaid balance still on them. This way you won't be able to continue spending.