While there are many benefits of carrying a credit card, such as the ability to make large purchases in a more efficient manner, there is also one major pitfall: You could find yourself buried in debt soon enough.
With this in mind, it's important to understand the top causes of credit card debt. This knowledge can help you avoid a bad situation in the future.
Here are some of the most common causes:
- Poor spending habits. If you continue to spend money, all without considering the long-term impact on your finances, your debt can begin to pile up.
- Divorce. This is a major life change that can leave you in a poor financial situation. If you're going through the divorce process, consider all your options for staying afloat financially. You don't want to get into the habit of putting every purchase on your credit card.
- Unemployment. There could come a point when you lose your job, which could lead to a situation in which you rely on credit cards to get by.
If you find yourself buried in credit card and wondering how you'll escape, it's time to create a plan of action.
For example, pay more than the minimum amount due each month. Along with this, keep track of your debt and the speed at which you're paying it down.
There are many ways to eliminate credit card debt, so make sure you keep an open mind. At some point, you may even want to learn more about the process of negotiating your debt with the credit card company.
Source: Pacific Debt, "Top 5 Causes of Debt & How To Fix Them," accessed Nov. 08, 2017