Credit card debt - Why do we have it

In this two-part series, we will discuss the popular 10 reasons why Americans rely too much on plastic when it comes to paying their bills. Credit card debt is a problem that affects almost everyone in the nation, with the average family owing a five figure sum.

We have written a lot about the topic of charge card debt, and with good motivation - many, if not most Consumers have tons of it from the 19 debit and credit cards they carry in their wallet or purse. The rather high rates of interest and the somewhat low minimum payments for charge cards make it easy to spend more money than you have on hand. Credit cards are useful tools, and it is useful to have them, but they create a great opportunity to fall into a deep hole that could rapidly lead to financial devastation.

Here will discuss the popular ten reasons why debtors spend more than they ought to using their charge cards.

• Inability to save. People are putting away money at the lowest rate ever. Saving money is worthwhile; it's far better to reach into your savings account when the automobile needs repair than it is to throw a two thousand dollar mechanic bill on your Discover card. The wise consumer will try to save a small amount of money from each paycheck so that a nest egg will be available in case of emergency. The inability to put money away for a rainy day means that growing numbers of people are pulling out their Visa card when a rainy day happens.

• Separation and divorce. After a marriage breakup, all expenses are higher and you may not have adequate money to account for all of the immediate needs if you have to find a new apartment and fork over cash deposits for phone, electricity and gas. What was formerly only one household with two paychecks may abruptly become two homes with one paycheck each when a marriage breaks up. With almost one half of all The country's marriages resulting in divorce, this problem becomes a real one for many people who weren't expecting it.
• Less-than-ideal management of their money. This reason seems obvious; you absolutely must keep tabs on how much you spend each and every month. Your Visa or American Express with a $30,000 limit doesn't mean you can max it out if you only earn $20,000 annually. If you spend more than you have to spend, you are going to have a problem. How much discretionary earnings do you have leftover after paying your rent payment, car loan, food and gas or phone bills? That figure is the maximum you can afford to spend using your plastic. A little careful thought should come into play when shopping. At 20% or more a year, charge card debt adds up quickly.
• Lowered income. If you are in a position where you are still working but earning less than before, you have to acknowledge that the amount you have available has been reduced, too. A reduction in earnings accordingly means a cut in spending, and that is that. Many people are currently working longer hours for less money than they used to. A few jobs, like PC administration, pay a fraction of the salary they did in the late 1990's. The last five years have been difficult for a lot of Americans as jobs have been outsourced and corporations have reorganized.