The mounting credit card debt has become a cause of concern for almost all the Americans. To add to this, is the fact that on an average each American holds three credit cards, with almost a negligible amount of balance in it. For many others, the issue rotating credit card debt has grown to be a grave trouble.
What precisely is Credit Card Debt?
Generally speaking we can categorize credit card debt into 3 strata’s, namely,
1. The 1st stratum of credit card debt is the dues left in the card at the end of the month, which we owe to the credit card company on which the latter charges interest. Our sole aim should be to pay off the entire amount at the end of each month.
2. The 2nd stratum of credit card debt is to be ‘in debt’ to the card company when the user is unable to make the entire payment due on the card, and ends up paying only the minimum payment. Such a circumstance is an alarm to the user to be careful as this could be the path to ‘credit card debt’.
3. The final level of credit card debt happens when it becomes impossible for the card user to continue with the minimum monthly payments. At this stage remedial steps should be taken to get out of credit card debt, like embarking on strategies on how to pay off credit card debt, resorting to debt management programs like debt consolidation loans, debt settlement, negotiating credit card debt etc.
Why Credit Card Debt is worst even before it is ‘worse’
Widespread usage of credit card is never good. Why to take the help of a second person in paying for your requirements when you can do it yourself? Do you borrow money from your neighbor or your relatives when you need to buy your necessitates? If not, then why do you use credit cards for making your payments when you have the cash to pay? Credit card though your own, is not your money. Just for the hurdle of carrying cash if you are using credit card then make your payments on what all you purchased at the end of the month. If you find that you are unable to make your payments on what you brought, itself shows that you have overspend.
Overspending is the key and credit card is the instrument which would easily land you into the looming trap of credit card debt. There are many myths that credit card is a boon as it gives rebates and airline miles, and makes life easier. But the truth any boon if not utilized can turn as a curse. Fire is one the most useful things, but if not properly used can finish you also, so is the case with these plastic cards. Use it, but never misuse it!
There is no constructive side to credit card usage. You would obviously overspend if you use these. When you pay in cash you can feel that your hard earned penny is leaving you. This feel would never be there when you use your card, as your wallet is never affected by it till your card bill arrives. As per few statistics it has been discovered that people spent 47% more when using credit instead of cash. This is you could otherwise have saved! If carrying cash is your concern, then the best solution is ‘debit card’, as this would never let you spend more than what you have in your account.