Sunday, June 29, 2008

Credit Card Debts: Causes and Prevention


Nowadays, using the credit card is very prevalent. Many banks will also promote their credit cards to users by giving some free gift. There are some causes and prevention of credit card debts are as follows:

Causes

Firstly, the users are having poor money management. The users’ salaries may have reduced but the expenses still remained unchanged so the expenses are more than the income. Ultimately, it leads to debts. Besides, it depends on the users’ characteristic, some users like to play the peacock, even they are unable to pay the debt at the end of the month but they still want to make payment by credit card due to be sensitive about one's reputation. On the other hand, unemployment is also another factor because people who experience unemployment may continue to perceive it was only for a temporary period.

Prevention

Firstly, with debt management plan, users have to pay a regular monthly amount to a Debt Management Company. This company helps the users negotiating longer repayment times with your creditors and lower repayments to the Debt Management Company. Also, the users can cut down the amount of the cards they are holding. Another best practice regarding credit cards is to have a direct debit set up so that users have to pay back the full amount each month. This means that while users have the convenience of using the card in emergencies or while abroad, users have a strong incentive not to let the spending get out of control.

By PeiCin

No comments: