Some Facts About Credit Cards Debts

Unsecured consumer debt, (also known as credit cards debts), is the primary reason people have bad credit and need loans for debt relief.

Our national love affair with plastic credit and our equally national inability to manage it responsibly has led many people down the road to unmanageable debt. Owing large amounts of money and being unable to pay off debt has become an American way of life.

While these cards can be very convenient, they have been known to encourage both irresponsible spending habits and a decrease in financial discipline. Many argue that credit cards are more trouble than they are worth. Yet, millions of people around the world still use them. Often, people will then make their situation worse by choosing to take out loans for debt relief when they owe too much and can't make the payments on credit cards.

Credit cards debts occur when a card holder buys something via their card. Because the card holder often thinks of the credit card as a bottomless pit of money, he/she often doesn't allow for the wise planning and attention to budget that stems from using only cash to make purchases. Things get even worse when monthly bills are not paid on time.

The level of debt increases at a rapid rate due to the interest and costly penalties often associated with late credit card payments. Credit card companies often charge a late fee every time a client fails to pay on time. This fee can vary, but it is usually anywhere from $15 to $30 per month. It is no surprise that the bulk of these companies' profits stem from the late charges and interest accrued by card owners.

Simply put, credit card companies make millions of dollars from our inability to pay debts in a timely fashion. Sometimes the only way to break the cycle is to get a credit card consolidation loan.

Bad Credit Is Contagious.

Almost as damaging to credit card customers is the effect these failures to pay have on credit ratings. Credit agencies are immediately notified when a cardholder has defaulted or missed a payment. The result is that the consumer's record is marked. Bad credit is an awful thing to have, as people's credit scores suffer and make it very difficult to be approved for a loan to buy a house or car.

Finally, if a customer continues to default, other creditors may increase their interest rates for that customer, even if the person has paid all of the debts to that particular company. This is known as universal default and only makes the situation worse for someone who is struggling to get out of debt.

The popularity of plastic credit is soaring worldwide, in spite of awareness of how damaging credit cards debt can be. Today's college graduate will more than likely owe at least several thousand dollars when entering the workforce and will be forced to take out more loans to cover the existing debt... and the cycle is continued.

Learning how to utilize your credit responsibly is crucial to avoid the traps and pitfalls of credit cards debts. A little budget planning helps avoid making the credit companies wealthier than they already are.

For more information on managing credit cards debts go here.  

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Notable Quotes

quote open We must learn that competence is better than extravagance, that worth is better than wealth, that the golden calf we have worshiped has no more brains than that one of old which the Hebrews worshiped. So beware of money and of money’s worth as the supreme passion of the mind. Beware of the craving for enormous acquisition.quote close
~ Cyrus Augustus Bartol

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