Credit Card debts: Causes and Prevention

It seems now days that credit cards are almost a necessity, instead of a luxury, which has caused so many people to have a big problem with credit card debt. Many people now have more than one credit card with a balance and you might even be one of those people. If you are one of the millions of people wanting to get out of credit card debt, then first you need to understand what caused the credit card debt problem to begin with.

1) Less Income, More Expenses

It so happens that the main breadwinner of the household loses his job but monthly expenses are not cut down in line with the reduction in income. This obviously leads to a rise in debt. The family is forced to use their credit cards for groceries, utilities, etc.

2) Poor Money Management

Poor money management is one of the best reasons why so many families accumulate lots of debt. Not having a monthly spending plan and not keeping track of your monthly bills makes you unaware of where your money is going. You might be spending hundreds of dollars every month towards items that are useless and have no value in your life, yet you do not realize it. While your money is going towards purchasing useless items, you might also be charging your necessary purchases on your credit card, forcing you to pay interest on these purchases every month.

3) Hoping to win the lottery

Most people hope to win the lottery but the chances of that happening are 0%. Do not spend tomorrow's saved money today just because you expect a promotion in your job or are expecting an inheritance from a deceased grandfather. We all know life is unfair and things can go wrong more easily than going right.

Now that the credit card debt problem has been explained in a very basic manner, we need the solution to get the problem under control.

Depending on your level of debt you can take one or more of the following actions to reduce or eliminate your debts

1) Making a budget

Making a budget is what you should do first if you don't want to fall into a deeper debt load. Assess how much do you get from your income or other means and your expenditures. Your goal is to ensure that you can meet all the basic necessities: food, housing, clothes, health-related costs, among others.

2) Contacting your creditors

You may not include this step in your plan but running away from your creditors is not the right answer. If you are having trouble paying off your debts, address this immediately with your creditors. State to them the reason why it has become hard for you to pay these debts, and negotiate your debt to reduce your monthly payments.

3) Dealing with debt collection agencies

If you cannot stop your creditors to turn over your debts to debt collectors be prepared to protect your rights. The Fair Debt Collection Practices Act clearly states that those collecting debts may not bug you, give false assertions, or do practices that are not fair when they are collecting money from you.