Credit Card debts: Causes and Prevention.

It is often the case that your mailbox is filled with a number of credit card debt settlement notices, or you may be plagued by collection calls, and if such is the case with you then you must be having debts that you are finding difficult to pay off, and the problem has been going on for some time

Credit card is a system of payment named after the small plastic card issued to users of the system. In the case of credit cards, the issuer lends money to the consumer (or the user) to be paid later to the merchant. It allows the consumer to 'revolve' their balance, at the cost of having interest charged. However, it can lead to a big amount of debts or bankruptcy for the users or consumers.

There are several causes made the debt of cardholder become bigger and bigger.First of all ,the users might just keep on swapping the credit card unlimited because they don't have to pay the money on the spot. They didn't see where the money flows so they won't feel anything as long as they still have cash in their wallet. Some of them may hold 3 or 4 credit cards at the same time too. When there is due date, those users only pay the interest and the minimum amount of principal; they never fully pay for the amount. Finally, the poor money management and their self-attitudes will lead them to the pool of liabilities.

Besides that, the users might have to pay a big amount for medical expenses, deposits for buying cars or houses,thus they have to pay by using credit cards an owe money to the bank. Sometimes, the credit card debts may be caused by the internet threats such as phishing, malicious software, hacking and more. Due to the personal information, credit card number and the password have been stolen; the owners are liable for the bills which have been misused under their account

Prevention are as follow:

1. Photocopy the credit card offer, including the interest rate and terms. Create a letter to your credit card company/companies stating that you are thinking of switching to their competition because they are offering a far more reasonable interest rate. Credit card companies do not want to lose your business. Nine times out of ten they will match or even offer a lower rate than the competition has offered.

2. If you can afford it, pay double the minimum payment. 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. 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.

4. Cut up your cards so that you are not tempted to use them. Save one card for emergencies.

5. If you have equity in your home, look into paying off credit card debt with a refinance or fixed-rate home equity loan. Do not use a home equity line of credit, the rates will rise as the prime rises and suddenly you may find it impossible to keep up with your bills.