Credit card debt is the most common financial problem. With the convenient of spending on credit, most people carry credit card balances. These balances may cause serious debt problems if you don't manage them properly. Many people don't realize how they get trapped in a debt problem until they get far into the debt.
Below is the common way of people get into debt and build it up until it becomes a serious debt problem:
Credit card provides the most convenient way for people to make purchases, they don't need to think twice when considering to buy the item they like. They just need to swipe the card and bring the item back home. Generally, if you buy an item with cash, you have to make sure the money in your wallet is enough to pay the item and you have to make sure once the money is spent, you will have money to pay for other necessities. But, if you buy on credit, you can buy now and pay later. If you have not enough money to pay for full amount when the monthly statement arrives, you just need to pay the minimum payment, normally in 3% to 5% of the balance on the statement. Therefore, the credit card makes your purchases affordable.
As long as it is within the card credit limit, you can afford to buy anything. And, you will never have to worry of whether you will afford to pay it when you receive the monthly statement because you can just pay the minimum payment. If you spend on the card in this manner, a serious debt problem is waiting for you. The problem will soon hit you when you can't afford to even pay the minimum payment. This is how people build the credit card debt and get into a financial problem.
Generally, credit card debt carries high interest rate. It can be quickly snowballed up to a huge amount if you carry-forward the balance month to month and just pay the minimum. The interest charged on current month will be added up to the balance to incur more interest next month. If it repeats month by month, soon you will find it hard to meet even the minimum monthly payment. You are getting into a credit card debt problem.
You may not realize how you get into a debt problem until the problem hits you. But, the earlier you discover the debt warning signs, the more options you have to get rid of it. Don't panic when you find you are in a debt problem. Instead, you have to find a solution to resolve it. It won't go away unless you handle it and get rid of it with an effective debt relief solution.
Summary
Most people don't know how they get the credit card debt and hit by a debt problem. If your spending behavior is like the above scenario, be careful that you may get into a debt problem soon. Once you get into the problem, the only way to get rid of it is to resolve it with a debt relief solution.
Friday, March 9, 2012
Credit Card Debt - How You Get Into It?
