Debt Solution Source

How credit card debt creeps up around the unwary. How to watch for it and how to avoid it.

Though difficult to believe now, at one time many years back credit cards were a luxury, owned and flashed around only from the rich and famous or businessmen on the magnanimous expense account. (Years later the same flaunting by the same beautiful people was to be made with mobile phones – strapped conspicuously for the belt remember?).

Be that since it may, nowadays both these accoutrements are no longer luxuries; in reality they have become necessities of daily living. And together with them – or no less than with credit cards – has come a rather nasty little problem, to whit ‘credit card debt’. If we usually are not too careful it tends to steal up on us unawares, to create itself painfully obvious over a regular monthly basis.

What is it and whence does it come? To answer this we need to know what happens behind the scenes, behind the counter of the bank or card provider. Your credit card merely represents the account you have with the bank or supplier. Whenever you use it to buy that latest laptop or pay for an expensive dinner or whatever you’re actually borrowing that money in the bank and the bank will remind you of these payments, or borrowings, on the end of the month. The hens – as hens are wont to do – have come home to roost.

And these payments, aka borrowings, are what contributes to your credit card debt. Quite simple isn’t it. Not exactly rocket science although if you let things slide it may need rocket science to get the situation back about the right track. But of course you will not let that happen will you? You might not but thousands do though. And therein lies the scourge of the ubiquitous credit card.

So, you pay the amount in your monthly statement through the due date and you pay no interest. However, if you have been a little careless with your spending during the month, you may not have the ability to pay the amount and that means you will incur a late fee and hefty interest charges. Or you might be able to pay a little of this debt. That’s better than nothing – the bank is not going to charge a late fee, just the interest on what has not been paid off.

So far so great. Some left still to pay, with interest accruing, in the end of the next month. When, oh dear, a bad month, a little short again to help you only pay a part of the debt again. As well as the next month – only a part of it again…

So your credit card debit, like Topsy, grows. And grows .Should you continue making partial payments (or no payments in any way) the interest charges are calculated afresh on the new credit card debt. Which means you end up paying interest about the last month’s interest too.

Check out my other guide: household bank credit card, providian credit card and disney credit card

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