Credit Card debts: Causes and Prevention

The cost of living has increase due to the economic crisis nowadays. This crisis creates many problems that direct and indirect towards consumers. Many consumers did not have enough cash in hand is one of the reason they would choose to use the credit card. Another reason is because is an extremely convenient tool can solve their problems immediate. This kind of situation lead the number of credit card debts increase and it may lead many consumers facing the problems of bankruptcies. It is because consumer did not realized of consequences financial and non financial perspectives.

Top 3 major causes of credit card debts:

1. Unemployment
   Some of the consumers lost their job when the bad economies. This makes them unable to maintain their living expenses such as the groceries, utilities or education fees of children in that time. Moreover, they could not find a new job during the short period forced them to use the credit card to cover their basic living expenses.
   
2. Poor Money Management
   Many consumers are unaware to conduct a monthly spending plan and do not keep monthly bills or receipt to record how many money are already spend. Without keeping the bills, they would not realize how much their spending and whether their debts have rise or not. Sometimes they maybe spend unnecessarily that do not have any value to their life.
   
3. No saving cushion
   Most consumers using the future money when using the credit card and do not have extra money to save in bank. Besides that, they don’t understand the benefits of how money works and grows or how to save and invest the money for the emergency needs or expenses.

Prevention methods

1. Making a budget plan
   Every person need to have a budget plan especially those credit card holders. This can help consumers to perceive that they will avoid the unnecessarily spending or will not overspending their budget. This plan must set before and prevent from the debts.
   
2. Self control and discipline
   Have a direct set up is one of the best practices so that able to pay back the full amount each month and for emergency use only. Like this way, consumers can control themselves by limit the credit card amount and learn not to overspend more than their limit budget every month.
   
3. Cash transaction
   Another way is stop charging items on the credit card and use cash to make transaction for the items they buy. Then the consumers do not need to pay the extra charges for the credit card debts.