A problem called ‘Credit Card Debt ‘
Credit cards are no more a luxury, they are almost a necessity.
Therefore, you would imagine a lot of people going for credit cards.
The fact is that a lot of people posses more than one credit card.
The credit card industry is growing by leaps and bounds.
Therefore, 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 workflow associated with the use of credit cards as such.
Credit cards, as the name suggests, are cards on which you can get credit meaning you’re make borrowings (your credit card debt).
Your credit card is 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 to your credit card supplier.
Therefore, You must settle your credit card debt on a monthly basis. You will receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date.
Failing to do this you 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.
If you don’t pay off your credit card debt in full, the interest charges get added to it.
Moreover,Your credit card debt keeps on increasing.
The interest rates on credit card debt are generally higher than the interest rates on other kind of loans and or borrowings.
Further, the interest charges add on to your credit card debt each month that form your new balance or your new credit card debt amount.
If you continue making partial payments (or no payments) the interest charges are calculated on the new credit card debt.
You’ll end up paying interest on the last month’s interest too.
Consequently your credit card debt will accumulate rapidly and you’ll soon find, what was once relatively small credit card debt, has ballooned into a big amount, which you find almost impossible to pay.
If you don’t control your spending habits, your credit card debt rises even faster.
This is how the vicious circle of credit card debt works.
Distributed By ~ JMoField Debt Relief Services.com