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All About Credit Card
A payment card issued for purchasing goods, services and obtaining cash against a line of credit established by the issuer of the card. Bills are usually sent monthly and you can either choose to pay a minimum payment or pay in full, eg. Barclaycard / VISA / MasterCard.
Credit Card Debt
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‘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.
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The main reason behind so many casualties (rather debt related casualties) is that many people don’t understand the concept of credit cards properly. They treat 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 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 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 bills and end up paying interest on the amount they owe. This keeps building up their 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 debt on the prowl.
Soon they find that their current 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 is reached too and they again default on payments. This is how debt builds. Soon they learn about debt consolidation and other debt elimination techniques. They are quick to grab such debt reduction techniques, but that’s not because they are serious about reducing their debt but because of the attractive low APR offers. As if it were booty, they again get back to building up their debt. All the while they are spoiling their 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 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. 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 debt with all seriousness”.
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