Credit Card Debts: Cause and Prevention

Nowadays, you can buy anything without carrying a big amount cash of wallet. Credit card has provided us convenient ways for shopping, online buying or even booking seat in airplane. Most importantly, for a Malaysian, credit card provides 'Safety First' so that we could avoid criminals' nasty plans.

As time goes by, the 'swipe' habit had sadly bring nightmares to credit card holders. The moment we realized, the 'snowballing' interest payment almost disrupt everyone's peaceful mind and their financial plans. Before tackling these problems, we must know the causes lie behind the credit card debts.

Causes:-

1. Wrong perceptions among the people.
If you want to apply for credit card, you need a stable income. Different credit card types (eg, Silver card, Gold card, Platinum card) require higher income stability. Thus, peoples usually use that to prove themselves as 'better' or 'higher status' than others. Men are usually forced to apply at least 1 credit card, due to the 5C ( car, cash, condominium, certificate & CREDIT CARD ) requirements of 'hooking' girls, making themselves more miserable when comes to financial debt.

2. Poor financial management.

Many ladies spend money like water when it comes to shopping. Men are not much of a difference when it comes to paying bills after have a dinner with girls or friends. Many people thought that credit card is fast money and 'free' when it comes to spending. Because everything is taken care by bank in the first place, people usually will not worry about their daily cash flow. Once the bills arrive in a month, headache comes, money flies~.

3. The card rewards

The lending bank usually use different kinds of rewards, especially travelling rewards, to "encourage" card holders to spend more by collect points. Unluckily, the allure of this awards eventually gets you deeper and deeper into debts. In the end, the money you spend on credit card point is enough for yourself to travel any places you would like to go (somehow cheaper if you made a late credit payment).

Prevention is better than cure. Here are TIPS for credit card holders:-

1. Keep the Right Perspective
Credit cards do not mean anything, neither to prove you are financially stronger nor higher status. It's just a PLASTIC CARD (of course, with a magnetic strip...). Instead of holding various types of credit cards, you have to reduce the number of credit cards. It is a wiser act to own the card which is most important to you. Keeping an equal perspective regarding credit and cash helps you well enough to be more aware and more keen on spending too much. If you treat your credit card as if it’s also cash, the less unaware you become of your spendings.

Anyway, CASH payment is always the best. It's better use your 'current' wallet rather than your future income.

2. Do a footprints on each credit cards

Before you own a credit cards, it's recommended to do some homework. List out every credit cards policy, interest rates, free interest payback period and make a comparison. Find out which credit card gives you the lowest interest rate or the longest free interest payback period. Remember, just choose the exact card which serves you well. Furthermore, you will be more certain and aware your payment debts when you only holding one credit card rather than a handful of credit cards with different balances, different expiry dates and different interest rates. This usually will lead to confusion when you make your payments at the end of the month.

3. Strengthen your financial control and management

A well-planned financial management scheme can help you to become a more prepared and more organized consumer. With a great management plan, you won’t even want to choose to pull out your credit card from your wallet. One of the most crucial factors of credit card debt prevention is paying on time. People who can control their finances and manage their card payment schedules are the ones who rarely acquire credit card debt.

Last but not least, think carefully before using credit card. Once you use it, make sure you pay on time. If you can't assure whether you can do it, then just use 'cash on hand'. It is wise to be 'debt free' rather than to spend on something you cannot afford it.

(Taiwanese credit card debtors show up at the street in order to seek help from government to help them get out of debt pool.)