Credit Card Debt

By Don Burnham

Credit cards are no more a luxury, they are almost a necessity. You can't rent a car without one, you can't purchase goods over the Internet without one; you can't make airline reservations without one. Nearly everyone in modern societies have at least one credit card.

Now, however, the credit card industry and credit card holders are posed with a big problem called "Credit Card Debt." In order to understand what 'credit card debt' actually means, we need to understand the how credit cards actually work-- away from the point of sale.

People can use their credit cards to purchase things for which they do not need to make any payment at the point of purchase. The purchases are made by borrowing money against the account that is held by the credit card holder with the credit card issuing company. As people go on making such purchases it adds to this account, thereby creating credit card debt.

The total amount that is owed by a credit card holder to the credit card supplier adds up to be the total credit card debt, and needs to be paid back every month. Due to this the credit card suppliers issue monthly statements to the credit card holders and they are expected to pay back their dues within a particular date. Any delay in payment would result in the person having to pay extra money in terms of late fee and interest charges.

You have the option of making a partial (minimum) payment too, in which case you don't incur a late fee but interest charges are added which increase your credit card debt. So your credit card debt keeps on increasing because the interest rates on credit card debt are generally higher than the interest rates on other kinds of loans.

The credit card debt that is formed each month not only includes the outstanding amount that you need to pay, the interest that has been charged on it, but also includes the interest that is calculated on the previous month's interest paid. Thus with the more delay that you make in clearing your credit card debt, you only make matters worse by increasing your credit card debt.

You will soon find that the credit card debt has become a much larger amount than what it actually had been before. The amount may become so large that you may find it impossible to pay back. The only way you can help yourself is by curbing your spending so that you do not have a very large credit card debt. - 23218

About the Author:

Are you a credit card user and willing to know how exactly the credit card works? Then here is a website http://www.weknowthewayback.com from Don Burnham which explains you everything about Credit Cards.