Credit cards are no more a luxury, they are almost a necessity. So, you would imagine a lot of people going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by leaps and bounds. However, the credit card industry and credit card holders are posed with a big problem called ‘Credit Card Debt’. In order to understand what ‘credit card debt’ actually means, we need to understand the work flow associated with the use of credit cards as such.
Credit cards, as the name suggests, are cards on which you can get credit. Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier.
You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You should always pay off your credit card debt by the payment due date. Failing to do so will incur late fees and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you don’t incur late fee but just the interest charges on your credit card debt. One other option you can use to help your self avoid the interest charges, is to find yourself one of those 0% credit cards
If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don’t still control your spending habits, your credit card debt rises even faster. This is how the vicious circle of credit card debt works.
There is another option but only if you are good at making your payments on time and that is to move your higher interest rate credit cards with 0% balance transfers. This allows you to make payments on the balance without paying the interest and often this option is available up to 12 months. What ever you choose, always be responsible with credit, as you are only borrowing against your own future.
Technorati Tags: Credit Cards, 0% Balance Transfer Credit Card, 0% Interest Credit Card
This is a sponsored Post
No comments:
Post a Comment