Credit Card debts: Causes and Prevention

Nowadays, cost of people living has increased and it indirectly creates many problems towards many peoples. Many people like to use future money (credit card) as they didn’t have enough cash in hands. This made the numbers of credit card debts increase until create the major problems of bankruptcies each year. This is because many people never realized of its consequences of financial and non financial perspectives.

Factor that bring the causes of credit card debts

1. Poor money management
Poor money management is one of the bigger causes that why people have accumulated many credit card debts. Due to poor money management, people are not aware to conduct a monthly spending plan and do not keep monthly bills or receipt to record how many money are spends. Without keeping bills or receipt, people will never realized how much their spending on the product, and raise a number of debts in one month. With using credit cards, people will like to keep on spending with using the future money without perceive that they are unable to pay back the debts.

2. No saving cushion
When people using credit cards, they would like to use the future money and have not extra money to save in bank. When people are spending more than their income, they will be very hard to manage their savings accounts. The benefit of saving is to help you in cover your over expenses, in the case when you faced problems of divorce, job layoff, illness and others emergency expenses.

3. Unemployment
Due to bad economies, many people lost their job and unable to maintain their living expenses, this makes people using the future money (credit card) to cover their future living expenses. For households, they need cover many expenses purposes to maintain their current lifestyle by over using the credit card. This may lead to a rise in debt when expenses are not cut down to cover the reduction in income.

Prevention methods

1. Making a budget
We need to have a clear budget plan and need to keep all the expenses of receipt or bills in order to record how much money was use. This can help us to perceive that we will not overspending our budget that we have set before and prevent from the debts.

2. Self control and discipline
People who using credit cards should learn how to have a better self control and discipline in order to learn not to overspend it. People can control themselves by limit their credits cards amount by stop them to use the money if they was expenses more than their budget.

3. Contacting and dealing with creditors
You can address the problem with creditors instantly to indentify whether they could give revised on payment arrangement when you facing trouble on to pay off the debts. If the collection money from creditors is not fair, you can refer to Fair Debt Collection Practices Act to indentify debts problems.