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Credit Card Debts: Causes and Prevention
- Credit card can be defined as any card that many be used repeatedly to borrow money or buy products and services on credit. It is a plastic card having magnetic strip which issued by a bank or business authorizing the holder to buy goods or services on credit. Credit card also called charge card.
Credit cards allow us to shop online and provide a cushion in case of emergencies. However there are negative consequences of using credit card, people who overspend by using credit card have a hard time making ends meet and trouble saving for future. Credit card debt is an example of unsecured consumer debt. Debts accumulates and increases via interest and penalties when the consumer does not pay the money he or she has spent.
Causes of credit card debts: 
1. Poor money management: A monthly spending plan is essential. Planning is no more difficult than writing down your expenses and income and reconciling the two. Without money management, we have no idea where the money is going. Poor money management is one of the best reasons that why so many families have accumulated many credit card debts. It is because people are unaware to conduct a monthly spending plan and do not keep track of monthly bills.
2. Less income, more expenses: This happens when the household loses his job but monthly expenses are not cut down in line with the reduction in income. The family is forced to use their credit cards for their expenses in term of less cash in hand. If did not adjust your new reality, may appear overspent and the credit card debts also exist in this case.
3. Saving too little or not at all: Saving is the most important element for us to have a stable lifestyle. And the simplest way to avoid unwanted debt is to prepare for unexpected expenses by saving 3 to 6 months of living expenses. The consequence of saving too little is to having debts by using credit cards since credit cards have the advantage of provide a cushion in case of emergencies.
4. Excessive medical expenses: The cost of obtaining cures and medicine is increasing and almost all doctors accept credit cards nowadays. If one of your family members suffers serious illness and the health insurance cannot cover the medical bills, then you will use your credit card because you do not have enough savings in the bank or cash in hand.
5. Gambling: Nowadays gambling has become part of entertainments in our life. It is hard to stop when is becomes addictive. Thus, it will surely lead to a financial disaster because loans are freely available and can also borrow money through credit card. Besides that, gambling establishments may be the only place you can mortgage your house while intoxicated.
Prevention of credit card debts: 
1. Limit the plastic in your wallet: Every credit card comes with its own set of terms and conditions including varying interest rates, penalties, fees and due dates. The more credit cards we have the more money we will spend. It is much easier to make payments on time, remember which card has the lowest, and save you from making a mistake that will affect your credit history if you only have to keep track of one or two cards. We can self control to avoid overspend through limited credit cards in wallet.
2. Pay the balance in full and pay on time: Before using a credit card for a purchase, ask yourself( Do I have the funds to pay for this?) This is important in keeping control of your credit cards. Do not always carry a credit balance to it. If have enough money should pay the balance in full to avoid more and more accumulated debts. Furthermore, never make a late payment to anyone including car and house payments. Because of the universal default clause in credit cards’ terms and conditions, credit card companies can raise your interest rate if you are late paying any creditor or even your utility company.
3. Making a budget: People have to create clear budget and stick on it that includes monthly bills, food, entertainment and miscellaneous expenses will prevent from overspending and fall under deeper debt load. Setting up a budget is not always easy, so if you want come help Consolidated Credit Counseling Services offers free budget counseling. You can also consult your phone book to see if your community has a local office of Consumer Credit Counseling Service.
4. Avoid extra expenses and extra products: Sometimes there are little extra expenses that sneak up on you before you even know it. Thus need saving money to cover those extra expenses. However, if those extra expenses are within our control, we need to avoid it. Besides that, credit card companies will try to get you to purchase additional products such as fraud protection and insurance. The truth of the matter is you usually don’t need it. So, think seriously before do any decision.
5. Early Education: The best method for prevention is teaching our youngest generation all about money before they even qualify for a credit card. Fortunately many wonderful resources exist for parents and educators. Those resources are to teach them all about the importance of saving and developing good money habits. The earlier children learn how to manage finances the less likely they will be to fall into credit card and debts problems as an adult.
As conclude, we should aware of the causes and prevention of credit card debts and starts to spend less in order to stay with well financial situation.
References...
http://loss1987.blogspot.com/2008/06/credit-card-debts-causes-and-prevention.html
http://ecomspace.blogspot.com/2008/06/credit-card-debts-causes-and-prevention.html
http://www.bankrate.com/brm/news/debt/debt_manage_2004/top-10-causes.asp
http://www.3debtconsolidation.com/top10-causes.html
http://www.cardratings.com/howtoavoidcreditcarddebt.html
http://www.mozdex.com/prevent-credit-card-debt/
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