How indispensable are credit cards to you? Today, credit cards are no longer considered as a luxury. In fact, they have become a necessity. The credit card industry is growing as many people are going for credit cards. Some people even own more than one credit card. Thus, credit card industry and credit card holders are faced with a big problem called “Credit Card Debt”.
Literally, credit cards are cards on which you can get a credit. It is a representation of the credit account that you hold with the credit card supplier or company.The payments you make using your credit card are actually what you borrowed that contribute towards your credit card debt. Your total credit card debt is the total amount you owe the credit card supplier or company. A monthly statement is sent to you. This is your credit card bill which reflects your total credit card debt. This credit card billing must be settled on a monthly basis on the due date to avoid late payment fee and interest charges. However, you may also have the option of making partial payment. If in case you were not able to pay your credit card debt in full, the interest charges are added to it. When this happens, your credit card debt keeps on increasing. The reason for this is the high interest rates on credit card debt than on other kind of loans or borrowings. It is also important to know that the interest charges added on your credit card debt each month becomes a new balance, Therefore, if you continue making partial payments or no payments at all, the interest charges are calculated afresh on the new credit card debt, so you end up paying the interest on the last month’s interest, and your credit card debt accumulates rapidly which you find almost impossible to pay. This is the result of the vicious circle of credit card debt.