Credit card debt
Posted at by ifydcat on category UncategorizedA issue known as ‘Credit Card Debt ‘
Credit cards are no much more a luxury, they are nearly a necessity. So, you would imagine plenty of folks going for credit cards. The truth is, lots of folks posses much more than one credit cards. So, the credit card industry is growing by leaps and bounds. Nonetheless, the credit card industry and credit card holders are posed with a huge problem called ‘Credit Card Debt’. So that you can understand what ‘credit card debt’ really means, we must comprehend the workflow associated with the use of credit cards as such.
Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card can be a representative of the credit account that you hold with the credit card supplier. Whatever payments you make utilizing your credit card are really your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier. You ought to settle your credit card debt on a monthly basis. So, you obtain a monthly statement or your credit card bill which shows your total credit card debt. You should pay off your credit card debt by the payment due date failing which you’ll incur late fee and interest charges. Nevertheless, you might have the choice of making a partial (minimum) payment too, in which case you do not incur late fee but just the interest charges on your credit card debt. In case you don’t pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on growing, much more so simply because the interest rates on credit card debt are usually higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. In the event 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 come across that what was once a reasonably small credit card debt has ballooned into a massive amount which you discover nearly impossible to pay. Moreover, should 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.