Credit card debt
Credit card debt
‘Credit card debt’ is a much discussed topic in the
commercial and social circles. A big section of the population
has been bit by this bug called ‘credit card debt’. Can’t blame
them much; as such, it’s 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 don’t 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 for a
toss. That means people overspend and get into credit card
debt. They keep
spending till 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 utilised) if they don’t
hit the credit limit quick enough. These unnecessary spends
result in a situation where they are not able to payback their
credit card bills and end up paying interest on the amount they
owe. This keeps building up their credit card debt and they
soon find that the interest component has become a regular
feature in their monthly expenses and it is there even if they
spend nothing on their credit card. That is credit card debt on
the prowl. Soon they find that their current credit card can no
longer handle their needs and start looking to get another
credit card. With the new power of credit, they let themselves
loose again and follow a ‘shop till you drop’ routine. Soon the
credit limit of the new credit card is reached too and they
again default on payments. This is how credit card debt builds.
Soon they learn about credit card debt consolidation and other
credit card debt elimination techniques. 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 APR offers. As if it were
booty, they again get back to building up their credit card
debt. All the while they are spoiling their credit card rating
and they soon realise that no one is ready to lend them money
because of their credit history. They can only get a secured
credit card now (where you first deposit money into your credit
account and then only you get the privilege of spending it
(50-100% of it) using their credit card. Credit card debt
collection agencies, auction of their goods and bankruptcy is
the next thing that hits them and their dream run is blown away
in 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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