The Impact Of Credit Card Debt In Society
Due to the recent economic crisis, credit card debt has become a common occurrence in our society. From poor households to rich ones, people from all demographics are experiencing mounting credit card debts that are having a detrimental affect on our society.
Why Has Credit Card Debt Become So Common?
In 2011, Americans spent five times more on their credit cards than they did in 2010. The total credit card spending amounted to $48 billion, which suggests that more households are turning to credit to meet their basic monthly needs. These figures are so high despite the recent financial crisis making credit less accessible to those who need it.
One explanation for the higher than usual credit in the US could be the rising job losses. As more businesses go out of business, more people need to find readily available cash in order to meet basic needs such as monthly rental payments and groceries. As the number of jobless Americans has increased, so has the number of people choosing to use credit. Unfortunately, those who choose to use credit while unemployed enter into a perpetual cycle of borrowing to pay off the credit they could not afford to take out in the first place. As a result, creditors everywhere are owed billions by consumers.In addition to this, credit card companies have been luring in new customers by giving them special introductory offers. Offers such as '0% interest for six months' have been brandished following a mass write off of bad debts in 2009. These tempting offers have led to more people borrowing when they usually would not.
What Is So Bad About Credit Card Debt?
Once consumers have moved past the exciting 0% interest introductory offers, the interest placed on credit card spending can spiral out of control. With some interest rates reaching as much as 39%, many consumers find that they accumulate debts they will never be able to pay off. Many people end up paying minimum monthly repayments, which means they often end up in a never ending cycle of debt.
How Can You Get Out Of Credit Card Debt?
1. Halt all unnecessary spending immediately. If you can live without an item, do not charge it on your credit card.
2. Create a budget using a free online budget planner, and see how much you have left at the end of each month. Analyze areas of the budget where you could spend less, and cut costs accordingly. Use what you have left over to pay off your debts.
3. Make a plan to pay off your debts and stick to it. By using a debt repayment calculator, you can determine how long it will take to repay your debts and how much you need each month to do so.
4. Try moving your existing balances to ones with lower interest. By doing this, you can still meet monthly payments, but save money on the interest you pay at the same time.
5. Use a debt reduction service if you find self-management too challenging. Debt reduction services should be turned to as a last resort, as you usually have to pay a fee to access them.
Why Get Out Of Credit Card Debt At All?
If you are meeting minimum monthly repayments, you may wonder why you need to end your debt at all. First of all, the debt present on your credit file looks ugly to lenders. The sooner you rid yourself of it, the easier it will be to access financing when you need it for something important. In addition to this, a rapid approach to debt payment will cost less in the long term, which will ultimately save you money. By addressing your debts directly, you will be financially free and enjoy a securer future.
Get your Free Debt Advice and learn how to manage your debt.
Why Has Credit Card Debt Become So Common?
In 2011, Americans spent five times more on their credit cards than they did in 2010. The total credit card spending amounted to $48 billion, which suggests that more households are turning to credit to meet their basic monthly needs. These figures are so high despite the recent financial crisis making credit less accessible to those who need it.
One explanation for the higher than usual credit in the US could be the rising job losses. As more businesses go out of business, more people need to find readily available cash in order to meet basic needs such as monthly rental payments and groceries. As the number of jobless Americans has increased, so has the number of people choosing to use credit. Unfortunately, those who choose to use credit while unemployed enter into a perpetual cycle of borrowing to pay off the credit they could not afford to take out in the first place. As a result, creditors everywhere are owed billions by consumers.In addition to this, credit card companies have been luring in new customers by giving them special introductory offers. Offers such as '0% interest for six months' have been brandished following a mass write off of bad debts in 2009. These tempting offers have led to more people borrowing when they usually would not.
What Is So Bad About Credit Card Debt?
Once consumers have moved past the exciting 0% interest introductory offers, the interest placed on credit card spending can spiral out of control. With some interest rates reaching as much as 39%, many consumers find that they accumulate debts they will never be able to pay off. Many people end up paying minimum monthly repayments, which means they often end up in a never ending cycle of debt.
How Can You Get Out Of Credit Card Debt?
1. Halt all unnecessary spending immediately. If you can live without an item, do not charge it on your credit card.
2. Create a budget using a free online budget planner, and see how much you have left at the end of each month. Analyze areas of the budget where you could spend less, and cut costs accordingly. Use what you have left over to pay off your debts.
3. Make a plan to pay off your debts and stick to it. By using a debt repayment calculator, you can determine how long it will take to repay your debts and how much you need each month to do so.
4. Try moving your existing balances to ones with lower interest. By doing this, you can still meet monthly payments, but save money on the interest you pay at the same time.
5. Use a debt reduction service if you find self-management too challenging. Debt reduction services should be turned to as a last resort, as you usually have to pay a fee to access them.
Why Get Out Of Credit Card Debt At All?
If you are meeting minimum monthly repayments, you may wonder why you need to end your debt at all. First of all, the debt present on your credit file looks ugly to lenders. The sooner you rid yourself of it, the easier it will be to access financing when you need it for something important. In addition to this, a rapid approach to debt payment will cost less in the long term, which will ultimately save you money. By addressing your debts directly, you will be financially free and enjoy a securer future.
Get your Free Debt Advice and learn how to manage your debt.
Source...