Credit Card Debt

Remember when everyone paid for things in cash? Probably not.

Credit cards are no longer considered a luxury, but rather, a necessity. So
as you can imagine, a lot of people are going into debt with credit cards.
Many people posses more than one credit card. The credit card industry is
growing by leaps and bounds. However, both the credit card industry and
credit card holders are posed with the problem of credit card debt. In order
to understand what credit card debt means, you need to understand the
workflow associated with the use of credit cards.

Credit cards, as the name suggests, are cards with which you get credit (the
ability to borrow money). Your credit card is represents the credit account
that you hold with the credit card supplier. Purchases you make using your
credit card are actually amounts of money you are borrowing. This
contributes towards your credit card debt. Your total credit card debt is
the total amount you owe your credit-card supplier.

You are required to settle your credit card debt on a monthly basis. You
receive a monthly statement or bill which shows your total debt. You must
pay off your credit card debt by the payment due date. failing to do this
will incur late fee and interest charges. However, you also have the option
of making a partial (minimum) payment, in which case you don't incur a late
fee -- just the interest charges on your debt.

If you don't pay off your credit card debt in full each month, the interest
charges get added to amount. Your credit card debt keeps increasing (more so
than on other types of loans because the interest rates charged by credit
cards are generally higher). Further, the interest charges plus your credit
card debt from the prior month form the balance for the next month.

If you continue making partial payments (or no payments), your interest
charges are calculated afresh on the next credit card bill. You end up
paying interest on the last month's interest, too. Thus your credit card
debt rapidly accumulates, and you find that what was once a relatively small
credit card debt has ballooned into an amount you find almost impossible to
pay.
Moreover, if you don't control your spending habits, your debt will rise
even faster.

This is how the vicious circle of credit card debt works. Don't put yourself
in this position. Don't make any purchases on your credit card that you can
not afford to pay in full when the bill comes.

About The Author: William Jones contributes to several online magazines,
including http://litoc.com and http://go-recreation.com