What causes credit card debt?
What you can do to resolve your credit card debt problems.
If you’re tackling credit debt problems, it can be tricky to figure out where to start. You might think paying off your debts is the end goal but if you don’t understand why you got into this situation in the first place, there’s a chance that you could end up back in debt again very soon.
There are many reasons you could find yourself back in debt and we’ll help explain them here. If you're looking to get out of debt and need a little help, then there's no shortage of financial experts out there who can put together a plan that'll lead your finances back into the black.
When you compare different types of debts, you will see that credit card debt can be one of the most difficult ones to get out of. Credit card debt is created with desire, the need of something that one cannot afford at the time.
When you add these debts together and add interest rates to them, then you'll find that your total debt will be much higher than you imagined it could be.
Four main reasons for debt.
- The first cause of this issue would be the ever-increasing prices of everything from rent to food and energy. People do not even have enough money for their day-to-day lifestyle, which is a reason they end up going into debt. Time and again, people find themselves in a position where they do not have a choice but to borrow money.
- Emergencies are also an inevitable part of life. We never know when that sort of thing will happen. We have seen countless cases where people get involved in car wrecks or serious illnesses, causing them to pay for the damages or health care with their credit cards, as they may not have immediate access to the funds needed. As such, it's important to make sure you always have plenty of money saved up in your emergency savings account so that you can avoid getting yourself into debt by using your credit card.
- One of the biggest reasons and causes of credit card debt is that people want to live the same life as their peers. People tend to live beyond their means. Try not to buy everything that your neighbours or family members have, even if you can afford it! Jealousy will divert money from your main focus into spending habits that don't benefit anyone.
- The last factor we'll discuss is creditors, specifically credit card companies. The problem with these financial institutions extending lines of credit to people who can't really afford it is that it can lead to stress and serious financial troubles for both individuals and the country as a whole. Luckily South Africa currently has regulating laws in place to help curtail this unjust practice.
When your income isn’t enough to cover your expenses, it can be very tempting to use your credit card to fill the gap. While we all want to save money where we can, we don’t want to end up with a lot of credit card debt. Using your credit card to cover your expenses can end up costing you a lot of money in fees and interest if you don’t pay it off quickly. We hope that today’s post gave you some great tips that you can use to avoid or decrease your credit card debt. If you have any questions about how to handle credit card debt, feel free to contact Credit Health.