Saturday, June 28, 2008

Credit card debts: Causes and Prevention

Do you know when and who has invented the credit card? The concept of paying merchants using a card was invented in 1950 by Ralph Schneider and Frank X. McNamara in order to consolidate multiple cards. The Diners Club, which was created partially through a merger with Dine and Sign, produced the first "general purpose" charge card, which is similar but required the entire bill to be paid with each statement. It was followed shortly thereafter by American Express and Carte Blanche.

Credit card debt is a burgeoning problem throughout the world undoubtedly. As a credit card holder you must be one that with budget and good in self-control. Otherwise, you might unable to pay off accumulated debts and then lead to bankruptcy.
what causes credit card debts? Here it goes:
1. Poor money management~ you may encounter problem like over spending, non-payment of the debts without money spending plan. With that, you will know that how much money you can spend on. Thus it is vital to have it.

2. Multiple credit cards ~ there are some people like to show off their social status by having multiple cards which in turn creating sky high credit card debts.

3. Financial illiteracy ~ many people do not realise how money works and grows and how to save and invest money for future needs. Financial mistakes are increasingly expensive and complicated to resolve. Thus, it is essential to learn from expert and get in control.

when comes to debts it is to say prevention is better than cure.
Below are methods to prevent credit card debts:
1. You can pay off smaller balances first. It is common for a person to try to focus on their cards with larger balances first. Pay off the smaller ones. It will take less time and you will feel a sense of satisfaction when you have actually completed your goal. This will boost your confidence and make it easier to tackle the higher balances.

2. You can pay double the minimum payment if affordable. The minimum payment usually pays just enough to cover the interest and a little more that pays down the balance. Paying extra will pay your balance more quickly.

3. You can keep your credit cards to a limited number. It is not necessary to have more than one credit card. If you want to have a card that you can use everywhere, try just having a Visa, MasterCard, or American express card which are all used everywhere

4. You can create a letter to your credit card company stating that you are thinking of switching to their competition because other companies are offering a far more reasonable interest rate. Most probably Credit card companies will match or even offer a lower rate than the competitor as they do not want to lose your business.

5. You can also avoid making any purchases with your credit during peak buying season. As credit card companies charge you more interest during these peak seasons because they know that everyone is buying more items with their credit

6. You can have a direct debit set up. So that you have to pay back full amount each month.


You may also want to have a look at this sites:

No comments: