Credit Card Debt

Credit cards are no more a luxury, they are almost a necessity. 
So, you would imagine a lot of people going for credit cards. In fact, a lot of people posess more than one credit cards. So, the credit card industry is growing by leaps and bounds. 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 workflow associated with the use of credit cards as such.

Credit cards, as the name suggests, are cards on which you can get credit i.e. make borrowings (your credit card debt). Your credit card is a representative of the credit account that you hold with the credit card supplier. Whatever payments you make using your credit card are actually your borrowings that contribute towards your credit card debt. Your total credit card debt is the total amount you owe credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement or your credit card bill which shows your total credit card debt. You must pay off your credit card debt by the payment due date failing which you will incur late fee and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you don’t incur late fee but just the interest charges on your credit card debt. If you don’t pay off your credit card debt in full, the interest charges too get added to it. So your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings. Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt has ballooned into a big amount which you find almost impossible to pay. Moreover, if you don’t still control your spending habits, your credit card debt rises even faster. 
This is how the vicious circle of Credit Card Debt works.

Clear your Debts.

Currently there are many things being offered to clear your debts
but all these will have different methods of probably creating an even bigger hole than you are already in.

Consolidating Loans does on the outside seem a very good idea by grouping all your current loans and credit card payments into one monthly payment and then spreading the cost over a much longer period. While this does seem the way to go it will take a considerable amount of time to clear your debts.


The interest that you will pay on this type of loan will vary immensely and all depends on certain factors for example, current employment status, homeowner, mortgage, whether you have any other assets and finally any savings.

All these factors will give the Lender an idea of what you can actually afford or not as the case may be.

One major thing to avoid in all this the Insurance that will be offered to cover the payments if you are either taken ill or loss of job.

They very rarely if ever make any payments from these Insurance Plans and are so difficult to contact that you soon run out of time.

Many of the Top Banks have been making millions promoting these Insurance Plans because they know that will never have to pay out a single penny. You are far better off declining their Insurance and taking out a far cheaper option with some of the more respected Insurance Companies who offer this level of Insurance at a far cheaper cost and will actaully pay out on a claim.

But is consolidating your loans and credit cards the way to go, it would be so much easier just to get rid of the debts in the first place. The Lenders are going to use every tricky tactic in the book to get whatever they can out of you without any concern for yourself or your family members.

Constant harassment by telephone is one of their favourite tactics because with mail they will know that you can just throw it in the bin, although this is not advisable. You have to meet this head on and take action yourself and clear your debts clear your debtsyourself.