They aren’t considered a convenience, they are almost a requirement. You can expect that a lot of people are looking to credit card stores. Actually, many are carrying multiple credit cards. Therefore the market for credit cards is growing quickly.
But companies that deal with credit cards as well as consumers who use credit cards are faced by a massive issue known as “Credit card Debt’. To fully understand what “credit card debt’ actually is, it is necessary to know the processes involved when we use credit cards.
As its name implies is a type of card from which you can obtain credit i.e. take out loans (your debit card). Your credit card is a representation of the credit card that you hold with your credit card company. The transactions you make with cards from your account are your loans that contribute to the credit card account.
The total amount you owe on your credit card is amount you owe to your credit card provider. It is your responsibility to pay back the credit card debt each month. You will get your monthly statement or credit card statement stating the total amount owed on your credit card. It is your responsibility to pay the credit card balance before the due date to avoid late payment, failing which you’ll be charged late fees and costs.
You also can choose to make the partial (minimum) payment. In this instance, you won’t be penalized for late fees, but you are only charged the interest on the charge card. If you fail to pay off the account in full the interest costs will be added to the debt.
Your credit card debt is continuing to rise, more so since the interest rates on credit card debt generally are higher than other loans or rate of interest on loans. In addition, interest charges are added to the account each month and create a new balance or the new debt.
When you keep making only partial payments (or the payment is not made) then interest charges will be calculated anew against the credit card balance. This means you’ll be paying interest on the interest you paid last month in addition. This means that the credit card debt grows quickly, and then you realize that your credit card debt which was once relatively low has grown to a huge amount that you consider unaffordable to cover.
In addition, if not manage your spending habits the credit card debt could grow more quickly. That’s how the cycle of debt from credit cards is created.