Credit card is a small plastic card issued to the holder by a bank or financial institution entitling its holder to buy goods and services based on the holder's promise to pay for these goods and services. It is working on a buy first pay later system, that's why it enables consumers to buy goods and services on a credit term with an interest rate as a charges to pay off later. It is true that everyone will at least have a credit cards in his or her wallet nowadays, especially for the youngsters and teenagers. Majority of us will choose to pay by credit cards during online shopping and online transaction. Credit cards can be a great tool but all too often we find we have spent more than we can manage to pay back. This is especially true when we have multiple credit cards and lose track of how much we owe on each of them. Nowadays, credit card debts are major cause of bankruptcies each year. It is because majority of the people are unable to pay back that they have spent to the company. Therefore, debt accumulates and increases via interest and penalties.
HOW DID CREDIT CARD DEBTS OCCUR ?
1) Unemployment
This can be considered as a main reason why everybody is under credit card debts pressure. Obviously, nowadays unemployment rate is quite high, especially for the fresh graduates. Recent research shows that 80%~ 90% of the fresh graduates are under unemployment. Most of them still need to spend though they are unable to secure a job, due to this reason , their alternative is to withdraw via credit cards rather than cash in hand. This may lead to a rise in debt when expenses are not cut down in line with the reduction in income.
2) Divorce
Fees that must spend for divorce such as attorney, division of assets between husband and wife, proceeds given to children are the way to cluster up huge debts by using credit card if it is the gap between the expenses and income. Moreover, it will lead to reduction in income because divorce may force some people to quit their job and to have a walk in other countries.
3) Poor financial management
Poor financial 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. They have never realized their spending on the items that are useless and do not have any value in their life. This bad habit can be seen in most of our lifestyle. Moreover they just keep on spending without any saving .Thus, it has lead to a rise in debts by over using credit cards.
4) Expensive medical expenses
Credit card will probably become one of the useful sources of funds to pay off the medical expenses if health insurance is not adequate to cover the medical bills when one of your family members suffers serious illness.
5) Gambling
Gambling has become part of entertainments in our life. It can be a fun if we are not so addictive to it, but once it becomes addictive, it is hard to stop. Thus, it will surely lead to a financial problem if borrowing money through credit card for gambling.
HOW TO ELIMINATE CREDIT CARD DEBTS ?
1) Making a budget
We can attempt to create clear budget and stick on it that includes monthly bills, food, clothes, entertainment and miscellaneous expenses will prevent from overspending and fall under deeper debt load. Furthermore, we can do a shopping list state down the things that we need to buy and compare to our budget to ensure that it does not over budget.
2) Self control and discipline
One of the best practices is to have a direct set up so that able to pay back the full amount each month and use in emergencies. Thus, self control and discipline are requested to keep these cards in wallet and would not overspend. Moreover, we must have an awareness of the credit card debts and starts to spend less in order to stay away from financial crisis.
3) Stop using credit cards
The credit card users need to stop using credit cards, unless it is an urgent situation. The smart card user only uses the card in place of cash, or to obtain a purchase they can afford. Once the user has reduced credit card debt, they can stop worrying about falling deeper into debt.
4) Use your own saving
In my opinion, this is the best way to get rid of credit card debts. Try to purchase goods or services that are affordable by using our own saving, that is cash in hand. This is the most secure and the best method as we does not need to bear a liability once our payment is cleared. Therefore, attempt to purchase our needs in term of cash if it is possible, you can see the changes as well.
Generally, there are many ways in reducing credit card debts. Though the key point is to start spending less and merely purchase items that does not goes against the finanacial boundaries and attempt to avoid from using credit cards as long as you can.
1) Making a budget
We can attempt to create clear budget and stick on it that includes monthly bills, food, clothes, entertainment and miscellaneous expenses will prevent from overspending and fall under deeper debt load. Furthermore, we can do a shopping list state down the things that we need to buy and compare to our budget to ensure that it does not over budget.
2) Self control and discipline
One of the best practices is to have a direct set up so that able to pay back the full amount each month and use in emergencies. Thus, self control and discipline are requested to keep these cards in wallet and would not overspend. Moreover, we must have an awareness of the credit card debts and starts to spend less in order to stay away from financial crisis.
3) Stop using credit cards
The credit card users need to stop using credit cards, unless it is an urgent situation. The smart card user only uses the card in place of cash, or to obtain a purchase they can afford. Once the user has reduced credit card debt, they can stop worrying about falling deeper into debt.
4) Use your own saving
In my opinion, this is the best way to get rid of credit card debts. Try to purchase goods or services that are affordable by using our own saving, that is cash in hand. This is the most secure and the best method as we does not need to bear a liability once our payment is cleared. Therefore, attempt to purchase our needs in term of cash if it is possible, you can see the changes as well.
Generally, there are many ways in reducing credit card debts. Though the key point is to start spending less and merely purchase items that does not goes against the finanacial boundaries and attempt to avoid from using credit cards as long as you can.
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Prepared by Chong Hui Qi'
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Skimming is where the theft use sophisticated storage device to connect with a card reader and then access that information for malicious use. While this is a very perilous trick as such a device can directly be installed on any legitimate card reader without recognition the card reader is compromised.
