Most of the banks encourage their customers to take their issued credit card to make transactions. The credit card is so convenience that owners no need to pay immediately while purchasing and pay at the end of the month. Credit card debt occurred when the owner using credit card to make purchase.
In year 2006, there are 700 thousand Taiwanese unable to pay their credit card debt, NT$ 1 million for each people. This happen indicated that the credit card debts were a serious issue for all credit card owners.
Encouragement from Banks
Most of the banks issue lot of credit cards for their customers. Banks always encourage consumers to make transaction via their credit cards. All these cause credit card holders increased dramatically.
Poor finance management
There is so convenience to purchase by using future money without developing any plan. Thus, people keep purchasing and do not aware of amount of their spending. Therefore people realized that they are carrying a huge debt after receiving monthly statement.
Cycle effect
Rely on financial income is the main way for people to pay their debts. After paying for the debts, the remaining incomes are most likely to enough for daily use. Therefore people will continually use credit card and fall into a cycle of creating and paying of credit card debts.
Once the debts excess their income, the interest of debts or late payment charges are coming. These extra charges make the debts larger, like snow ball effect. People are work to pay for debts and it’s never end.
Finally, there were so many people were filed for bankruptcy after they faced economy crisis, inflation, recession or unemployment.
To prevent credit card debts affect our life, there are some suggestion as below:-
Budget planning
Planning own spending can helps people to manage their own finance. It is always a good practice to create a budget to limit spending by using credit card. With the budget, people are able to learn self-control from consuming and able to overcome their debts. Thus, huge debts would not be created.
Downsize credit limit
People should not always think about there is good to have an unlimited credit card. In order to prevent non-payable credit debts, people should dealing with their creditors to downsizing their credit limit. People are then limited to spending.
Critical Thinking
Each people are advised to have only one or two main credit cards. People are always like to have as many credit cards as possible to express their financial position to others. Furthermore, people always like to use various credit cards to make transaction with low credit limit. These will increase the complexity of financial management and also the charges of cards.
Conclusion
In year 2006, there are 700 thousand Taiwanese unable to pay their credit card debt, NT$ 1 million for each people. This happen indicated that the credit card debts were a serious issue for all credit card owners.
Encouragement from BanksMost of the banks issue lot of credit cards for their customers. Banks always encourage consumers to make transaction via their credit cards. All these cause credit card holders increased dramatically.
Poor finance management
There is so convenience to purchase by using future money without developing any plan. Thus, people keep purchasing and do not aware of amount of their spending. Therefore people realized that they are carrying a huge debt after receiving monthly statement.Cycle effect
Rely on financial income is the main way for people to pay their debts. After paying for the debts, the remaining incomes are most likely to enough for daily use. Therefore people will continually use credit card and fall into a cycle of creating and paying of credit card debts.
Once the debts excess their income, the interest of debts or late payment charges are coming. These extra charges make the debts larger, like snow ball effect. People are work to pay for debts and it’s never end.Finally, there were so many people were filed for bankruptcy after they faced economy crisis, inflation, recession or unemployment.
To prevent credit card debts affect our life, there are some suggestion as below:-
Budget planning
Planning own spending can helps people to manage their own finance. It is always a good practice to create a budget to limit spending by using credit card. With the budget, people are able to learn self-control from consuming and able to overcome their debts. Thus, huge debts would not be created.Downsize credit limit
People should not always think about there is good to have an unlimited credit card. In order to prevent non-payable credit debts, people should dealing with their creditors to downsizing their credit limit. People are then limited to spending.
Critical Thinking
Each people are advised to have only one or two main credit cards. People are always like to have as many credit cards as possible to express their financial position to others. Furthermore, people always like to use various credit cards to make transaction with low credit limit. These will increase the complexity of financial management and also the charges of cards.Conclusion
Credit cards are giving us many conveniences to use credit money to purchase something. It provides many positive impacts for our life. However, it could also bring many and serious negative impacts to us if we without appropriate and correct prospective on using credit cards.
References:
(1) http://www.mozdex.com/prevent-credit-card-debt/
References:
(1) http://www.mozdex.com/prevent-credit-card-debt/
(2)http://www.streetdirectory.com/travel_guide/145666/debts_loans/debt_prevention_and_management.html
(3) http://www-creditcarddebt.com/credit-card-debt-law/arlington-va-bankruptcy-lawyer-bankruptcy-abuse-prevention-178.php
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