by Jeff
24. September 2011 16:29
Let’s face it, nowadays almost everyone carries the power to purchase anything they like because of credit cards. Gone are the days when you need to save some cash for that coveted purchase or even the times when “I don’t have enough cash on me” . With a credit card you get what you want anytime you want as long as it’s within your credit limit be it gadgets, clothing, home furnishings and the likes. You also get to accumulate points that’s sort of a rebate or part of a rewards program but together with all the good stuff is you also get to accumulate debt faster than you can say swipe it. Sooner or later, you’ll understand the problem with credit card debt and why having more debt is really nerve racking.
The more credit card debt you have, the bigger the interest is added on top of the principal debt amount since it’s percentage based. Chances are, you probably didn’t make just 1, 2 or 3 singles purchases but probably multiple ones. And just knowing the number of purchases you made is enough to make you anxious to get your billing statement at the end of the month. Another thing to take note off is if you happen to have multiple credit cards then interest rates would also vary per card. There’s a big chance that when you get to max out your credit limit on one card is you use the other ones.
This actually gives you more headache in the long run as taking your debt from one card and strapping on it the interest and well including all the other ones from the different cards and you’ve got your own little debt crisis at hand. Much like a ticking time bomb, you’re waiting on possible solutions on how to get out of your debt issue without going through a bankruptcy. When your debt gets through a certain level, people think that filing for bankruptcy would do the trick to alleviate the credit this actually puts a temporary restraint on the collection process but you would still be liable to pay up if and whenever you get funds. Your credit rep would also be damaged well enough that you won’t be able to apply for future loans or credit.
Prevention is always better than the cure and avoiding situations like piled up debt is always the way to go. Check on your purchases first before swiping that card and if you think that you have much to pay up at the end of the month then it would probably be wise to save up that purchase you intend for your next pay or after the next bill cycle. That way you can sidetrack away from problems with credit card debt. Another thing to consider is to pay above the minimum required amount as this concept actually goes to show that only a fraction of your payment goes toward the principal debt amount because a big bulk goes toward the interest payment. In the long run, paying more would mean a shorter debt repayment period rather than having the debt for a lifetime.