Placing You In A Vicious Circle Of Credit Card Debt

Category: Finance.

Credit cards are no longer viewed as a luxury, but they are viewed as almost a necessity now by many people.

The fact that a lot of people now posses more than one credit card has meant that the credit card industry has grown in leaps and bounds. So as you can imagine a lot of people are now getting credit cards. However, credit card debt has created a serious problem for not only the holders of credit cards, but for the industry in general, and we need to know just how credit cards work to really understand the actual meaning of credit card debt. Your credit card is a way to access the credit account that you hold with the credit card supplier. Credit cards, as the name implies, are cards on which a person can obtain credit i. e. make borrowings( your credit card debt) . What you are doing every time that you use your credit card is in essence, and this money, borrowing money, the debt on your credit card account, needs to be repaid to your credit card supplier.

So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must settle your credit card debt on a monthly basis. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges. So each month interest is added to any outstanding debt. If your credit card debt is not paid out in full, it will continue to increase, as the interest rates on credit card debt are normally higher than the interest rates that you would get on other kinds of loans/ borrowings. To avoid what may begin as an easily managable credit card debt ballooning into a much larger amount which could cause you difficulty to repay, it is important that you pay the amount owing out in full each month if possible, so that you avoid the trap of paying interest on interest. Placing you in a vicious circle of credit card debt.

Moreover, failure to control your spending habits will result in your credit card debt increasing faster and faster.

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