A credit card is part of the payment system using a small plastic card that issued to users. It is issued after the credit provider has approved the users’ account and the cardholders can start to use it to pay for goods and services.
Nowadays, users always face financial problems. After research, most of these problems come from credit card debts. This is because the users overspend and cannot afford to pay the debts at last. There are reasons and ways to prevent the overspending of credit card:
1. No saving
Saving regularly is important part of money management. If there is no saving or saving too little in saving account, users will rely on credit cards to cover expenses when uncertainty happened such as accident. This will be a common mistake that increase the users’ credit card debts.
2. Poor financial management
This is also one of the common causes of high credit card debts. Financial management includes everything from income to bill paying, saving and investment. Fail in planning one area will causes problem in other areas. For example, if a user forgot to pay the credit card bill for a month, he or she will have to suffer high interest rate for late payment.
3. Overspending
Spending too much on something that just to satisfy personal need such as entertainment will also cause high credit card debts. Most of the people nowadays especially teenagers do not how to control themselves from swiping the credit card just to get what they want. They think that there is not a limit for them to shop but at the end of the month they will have to suffer credit card debts.
Prevention methods:
1. Saving
One of the ways to prevent is to set up an automatic monthly transfer from checking account to a saving account. With this system, users do not need to worry about forgetting to save money every month. Besides that, when uncertainty happened, there will be a sum of money for backup.
2. Have a good financial planning
One of the easy ways is keeping a calendar for payments are due. This is an effective way to keep on top of your due dates and avoid late payment. Besides that, users that do not have any knowledge for financial planning can also look for a financial consultant to assist them.
3. Budgeting
It is important to make a budget for necessary expenses each month. Besides that, find out the expenses that you do not really need every month and eliminate them. Every time before buying something, ask yourself whether do you really need those things.
Related links:
1. http://en.wikipedia.org/wiki/Credit_card
2. http://www.pcbs.org/credit-cards-can-encourage-overspending/
3. http://www.3debtconsolidation.com/creditcardmistakes.html
4. http://seekingalpha.com/article/20337-guide-to-credit-cards-how-to-avoid-overspending-with-credit-cards
2 comments:
Credit card.. indeed it's a really convenient tool for us to make payments. However, we still have to manage our own financial planning and parents must educate their children before they sub any cards for them.
July 31, 2009 at 2:22 AMactually everything is just based on the user. It is because that will be very easy for them to click and can get what they want but it will result full of debt at the end of the month.
July 31, 2009 at 9:46 AMPost a Comment