Everything in this world has its pros and cons side. Definitely, credit card not only can benefit but also bring side effects to the user.The pros of credit cards are:
1. It establishes a good credit to some retailers. For instance, we can use credit card to buy car easily.
2. It could come in handy if we have an emergency that requires us to pay a large sum of money.
3. Some credit cards can insure whatever we buy with them.
On the other hands, the cons of credit cards are:
1. We might max it out and get in way over our head.
2. We might be unable to pay the bill and mess up our credit.
However, we focus on the cons side of the credit cards that is the credit card debts. Credit card debts are quite major problems in most of the countries (including Malaysia) now. In order to eliminate the credit card debts from our life, it is better for us to recognize its causes.
Here are some factors of the credit card debts:
1. High interest rate
The credit card interest rates are quite high, so the profits that bring to the banks and other credit card issuers are definitely high. Therefore, banks and credit card issuers are after their slice of that “big” money from us.
2. Multiple credit cards
It is very easy to get credit cards, multiple credit cards indeed. If we do not have the credit problem in the past, issuers of credit cards make it easy for us to apply for credit card. But, remember the more credit cards you have, the more debts you get.
3. Peer influence
Our friends, neighbors and work colleagues might all have multiple credit cards, talking about them and flashing them around from time to time. All these can influence our own attitude of using the credit card debt.
4. Society influence
When we see people around us buying new furniture, going for exotic vacations, or going out to expensive restaurants all the time, we may want the same even if we do not know if they are doing so on credit card. But we don not have the immediate cash to follow all these so what will we do? Jump on the credit card train? That is what the society may be pushing us towards.
Besides knowing the causes of the credit card debts, we also need to find ways to prevent the credit card debts. So below are some of the credit card debts’ preventions:
1.Try to limit the credit card use to only one or two cards only and never becoming a multiple cards user.
2. Using the credit cards wisely by asking ourselves the following questions before purchasing with credit card:
- Is this something that I need?
- Do I need it now?
- Do I have the ability to repay?
- How long will it take me to repay?
- How much will it ultimately cost me?
4. Shopping around for credit cards with the lowest interest rates, lowest annual fees and most reasonable grace periods before the finance charges begin.
5. Paying the entire balance when it is due and reviewing your spending habits to cut unnecessary purchases.
6. Paying the credit card bill as soon as possible and if we are not able to pay the entire amount, pay more than the minimum amount due when possible.
7. When using credit card to buy an item, writing down the amount and subtract it from our funds to ensure that we can pay the amount at the end of the month.
8. Never lending credit cards to friends or leaving the cards or receipts lying around where people can find them.
9. Keeping a list of the credit cards account numbers and phone numbers in a safe place in case a card is stolen or lost. If the card is really lost or stolen, reporting it as soon as noticing it is missing.
Related links:
http://www.youcandealwithit.com/credit_card_debt/index.shtml
http://www.youcandealwithit.com/credit_card_debt/using_credit.shtml
http://www.eliminate-credit-card-debt-now.com/EliminateCreditCardDebt.htm
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