Credit Card Debt Problem

Credit cards are no more a luxury, they are almost a necessity. So, you would imagine plenty of folk going for credit cards. In fact, a lot of people posses more than one credit cards. So, the credit card industry is growing by jumps and bounds. However, the credit card industry and credit card holders are posed with a large problem called 'Credit Card Debt'. To realise what 'credit card debt' actually means, we need to understand the workflow related to the use of credit cards as such.

Credit cards, as the name implies, are cards on which you can get credit i.e. Make debts ( your credit card debt ). Your credit card is a representative of the credit account that you hold with the credit card provider. Whatever payments you make using your credit card are actually your loans that contribute towards your credit card debt. Your total credit card debt is the whole amount you owe credit card provider. You have to settle your credit card debt on a monthly basis.

You receive a monthly statement or your credit card bill which shows your total credit card debt. You may pay off your credit card debt by the payment payment date failing which you may sustain late penaltiy and interest charges. However, you've got the choice of making a partial (minimum) payment too, in which case you do not attract late penaltiy 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 too get added to it.

Your credit card debt keeps on increasing, more so as the IRs on credit card debt are generally higher than the rates on other sort of loans/borrowings. Further, the interest charges add on to your Credit Card Debt every month to form the new balance or the new credit card debt amount. If you continue making partial payments ( or no payments ) the interest charges are worked out anew on the new credit card debt.

You finish up paying interest on the last month's interest too. Thus your credit card debt accumulates rapidly and shortly you find that what was once a relatively little credit card debt has ballooned into a gigantic amount which you find virtually impossible to pay. Moreover, if you don't still control your expenditure habits, your credit card debt rises even quicker. This is the way in which the vicious spiral of credit card debt works.