Credit Card Debt is a much talked about topic in commercial and social circles. A huge part of the population has been bitten by this bug called, “Credit card debt”. You can not blame them much; it is pretty easy to fall prey to this bug.
The main reason behind so many credit card casualties (rather credit card debt related casualties) is that many people do not understand the concept of credit cards properly. They treat credit card as free money that is never to be returned. Thus all the discipline, which would otherwise have been exercised with spending hard-earned money, goes up for a toss. That means people overspend and get into credit card debt. They keep spending until they reach the credit limit on their credit card. Some people go to the extent of treating that like a game and consider it a defeat (or consider their credit card under utilized) if they donot hit the credit limit quick enough. These unnecessary spends results in a situation where they are not able to pay back their credit card bills and end up paying interest on the amount they owe.
This keeps building up credit card debt and soon discovered that the interest component has become a regular feature in their monthly expenses and it is there even if nothing was purchased on the credit card. That is credit card debt on the prowl. Soon the current credit card can no longer handle their needs. Another process starts with an application for another credit card. With the new power of credit, the holder is yet loosed again into credit card debt and follows a “shop till you drop” routine. Soon the credit limit of the new credit card is reached too and again default on payments begins. This is how credit card debt builds. Soon credit card debt consolidation and other credit card debt elimination techniques are learned and put into practice. They are quick to grab such credit card debt reduction techniques, but that’s not because they are serious about reducing their credit card debt but because of the attractive low percent annual interest rate offers.
As if it were a prize, credit card debt is built up once again. All the while, the newly gained credit card rating has begun to spoil and no one is willing to lend money because of the credit history. Only a secured credit card is available, where money must first be deposited in the credit account and the holder has access to only 50-100% of the deposited money, using the new credit card. What happens next? The credit card debt collection agencies, auction off all goods and bankruptcy follows. The dream run is blown away in just a moment.
The moral of the story – “Understand the concept of credit cards and treat credit card debt with all seriousness”.
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