Credit Card debts: Causes and Prevention

Credit Cards usage for nowadays are commonly apply by all Malaysian workers, households and students. This wonderful plastic card makes purchasing items so simple and easy. In this economic recession, with prices of goods and services going up while income remains unchanged, more and more Malaysians are expense beyond their earnings. Credit card debt is perhaps the most visible symptom of a bigger problem. Are you one of the Credit Card debts’ victims? Are you can manage your credit card properly?

Below are the causes of credit card debts;

1) Less Income and expense more
As we know that there are an increasing number of households using credit cards and some of the breadwinner of the household may use this credit card to pay their monthly expenses. If the breadwinner of the household loss his/her job, the monthly expenses will not cut down while reduction in income. This obviously leads to a rise in debt of credit cards for buying their needs.

2) Poor Money Management
Planning for monthly expenses is vital for everyone. Without planning, you may surprising there is an accumulated lots of debts and have no idea where the money is going. Besides, you may buy unnecessarily items which accumulated to the high cost and you have a mind set that credit cards payment is unlimited while you go to shopping. Therefore, you need to pay the interest for that unnecessarily items purchased every month as well as the accumulated debts.

3) Weak in self control and self determine
Besides, from the poor money management, a person self determine, attitude, personality will affect their expenses of the month. For example, a person may influence or approach by a promoter in the supermarket to buy a new product or promotion product. Therefore, personality and self determine of individual will affect them to buy the product or not. If they are weak in self determine may cause them to buy an unnecessarily items, this will increase the expenses and also debt amount as well as interest need to pay.

Below are some suggestions to prevent credit card debts;

1) Earn More, Spend Less
We must ensure to cut all unnecessary spending. Saving can come from changing in few habits, e.g. buy a pair of shoes when it is necessarily, buying supermarket branded grocery instead of regular brands. These may reduce the debts from our monthly budget by earning more and spending less.

2) Establish a budget and then follow that budget exactly
In other words, which mean that strengthen the money management. For example, do not buy new furniture using the credit card on a whim when have no budgeted for that month. Besides, a budget must suit for own capability. Such as monthly income is RM2000; therefore a budget for that month does not access RM2000.

3) Get a low interest credit card if your credit card's interest rate is excessive.
Before applying the new credit card, you must understand and find out what is the interest rate will be charged. Besides, you must understand the terms and conditions of applying credit card to avoid any unfair charges. Therefore, the better your credit, the lower the rate for which you will qualify.

4) Avoid bringing credit card go to shopping
If you think you are the squander while go for shopping, the most effective way is do not bring your credit card out for shopping and only bring cash, which the amount that you can spend according to your budget. This can help you save a lot of money.