Credit card debt has been the number one debt problem for most households. The convenient of it enables people to buy anything that they can't afford to pay with cash. They buy and pay now with credit and pay it later when the monthly statement arrives. Most people don't realize how they get into a financial problem with this type of spending behavior until they get far into debt. Let's review how people get their credit card debt so that you can avoid it.
1. Credit card debt starts with a belief of the power of cashless purchases
The first step people get into a financial problem is, they believe everything can be brought with credit card. With the plastic cards in hand, they can buy now and pay later. The best part of cashless purchase is, if they can't afford to pay in full amount when the statement arrives, they don't need to worry because they just need to make the minimum payment, normally in 3% to 5% of the balance in the statement. That's why you don't need to be rich to spend like a rich man as long as you have a few of these cards in your wallet.2. Credit card debt built up from compound interest and new cashless purchases
The plastic cards make you affordable to buy almost everything, but they will drag you into a debt hell when you have no money to repay the balances. The credit card debt is not built up overnight, but it is accumulated from month to month just because you don't pay it in full amount. It is added up from the generated interest and new cashless purchases if you continue to swipe the card to buy thing that you are not afforded to buy with cash. The amount of minimum payment is increasing, so do the balances, you find it is getting harder to meet the minimum payment requirements. You are not far a way from the debt hell.3. People are hit by credit card debt because they fail to detect the debt warning signs
Since the debt problem does not hit suddenly, you should start to see the warning signs when it is close to you. Most people get into debt just because they fail to detect the signs. It will be a clear sign if you find yourself spend more with credit compares to your income. If you buy things with the money you don't own, you are creating debt. It is a sure sign of debt if you find you have a hard time making the monthly payment on time. The first call from a creditor can be a good signal that you are having financial problem to make the credit card payments.4. Credit card debt keep going up because of people are ignoring it
Debt will stay and keep growing if you ignore it. Many people get into debt mainly due to the behavior of ignore the clear warning signs of the problem. If they face it earlier, they will have a very good chance to get rid of debt easiest and at the more comfortable method. On the other hand, when they ignore it and let the debt grows, it will hit them hard.Summary
There are many scenario that people get into a debt problem like the above. You want to continue a debt free life, try to avoid yourself from having a chance to get into credit card debt.
