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Credit card debt is one of the leading cause for needing to file for bankruptcy or take out mortgage loans on your home or other drastic measures.  Studies indicate that credit card debt is slowly making a consumers financial situation bad or worse than ever before, and can also cause psychological depression and contribute to lower GPA’s and increased substance abuse among college students.  Credit card debt can build up quickly, especially if you have more than one card and a habit of charging everything.

Interest

The interest is the money paid on a balance to a lender by the borrower, which is to be paid every month, if you roll over your balance from month to month. Interest doesn’t usually go down on its own, and when only minimum payments are made your balance can grow to un-manageable amounts.  If you are late on a payment your interest rates can increase to 35 percent, making it very hard to pay off balances.  With interest rates still on the rise, there’s no better time to take a good close look at your finances.

Payment

Debt, especially credit card debt can accumulate very fast and many people soon find themselves barely able to even make the minimum payments.  Remember if you are late on only one payment, your rate could increase drastically.  If you are not good at remembering payments, it’s wise to set up direct debits to pay your credit card bills.  It’s always best to control your spending and try to pay more than the required minimum payment whenever possible.

The main problem with credit cards is that they make it very easy for you to spend money.  The most important step take to reduce credit card debt is to not use your credit card for every little thing, use cash whenever possible.  Studies show credit card debt is higher for males than female debtors, and even higher for joint accounts.  The problem with carrying credit card debt is that the interest on the card will typically accrue much quicker when you only make minimum payments.

It comes as a surprise how credit cards have found their way into our lives (and out wallet). Credit cards have gradually turned into becoming a necessity (rather than luxury). You can find credit card processing machines in almost all the shops today. With the advent of internet, online credit card processing has become popular too. ‘Credit card processing’ as such is a really interesting topic. This article tries to put into perspective the people, systems and the equipment that go into credit card processing.

First, let’s check the equipments used for credit card processing. So, there are credit card processing softwares for online credit card processing, there are credit card processing machines (i.e. the credit card reading machines at shops), there are data verification/validation devices/softwares that verify the security information on credit cards, there are communication devices/systems that enable safe transfer of credit card information from one point to another, and then there are other credit card processing equipments like the credit card processing equipment that is used for the preparation of the actual plastic (credit card).

Then there are various service providers that provide services related to credit card processing. There are suppliers for credit card processing equipment and suppliers for online credit card processing services. Then there are postal and courier service that help deliver credit card bills in time. There are merchants/petrol-bunks etc which provide facility of payment collection boxes at their premises (another important aspect of credit card processing).

Besides that there are complete systems for processing credit card applications, there are systems for credit card bill processing/generation, there are people at call centres who help in addressing the queries from credit card holders and, very importantly, there are people (sales representatives) who help you in filling the credit card application forms. Another important entity with regards to ‘credit card processing’ process is the credit rating bureaus. Credit card bureaus maintain a database of credit ratings for individuals and businesses. This rating is based on the data received from various credit providers over a period of time. This rating is the most important part of credit card application processing and a bad rating can lead to rejection of the credit card application altogether.

Thus, credit card processing involves a coordinated effort from a lot of professionals and service providers. In that sense, we can also say that credit card processing is an industry in itself that has generated a lot of employment.

There are many Americans today literally drowning in debt and one of the reasons for this is the relative ease of credit in the form of readily available credit cards. This problem has become so large that even the USA as a whole is addicted to debt and the US as a nation is a debtor nation to many major countries. Thus bad debt should be reduced in your personal finances so that you can start thinking of more profitable ways to employ your monthly income.

This article will highlight three simple but effective strategies to help you reduce your household debt and hopefully put you in better shape to start using the extra money saved from interest payments to make more money for your household via investment.

Firstly, you can consider using a debit card and stop using your credit card. What is the difference you may ask? A debit card is good only for the amount of money that you have in your bank account and will prevent you from splurging on the big ticket item that you saw in the shop front the other day. It also will help you cultivate the habit of spending the money that you currently have and not exceed your means.

Another variation on this idea is to pay for purchases with cash as this will mentally prevent you from spending on credit and losing your rational ability to manage your finances. We all know that sometimes a credit card generates in us this urge to spend and especially when we are under stress, we end up spending more than we should. Using cash or a debit card would help to counter such influences.

Secondly, make it a habit to pay all your credit card bills on time at the end of the month. We all have the habit of procrastination and so the best policy is to pay all your credit card and other bills in full at the end of the month. Did you know that the credit card companies and the banks make lots of money from consumers who do not pay their credit card bills on time based from the interest payable?

Thirdly, we should take some time monthly to examine our credit card bills and then take a highlighter to consider wasteful expenditure and then take efforts to cut down such expenditure. Some usually suspects include a cell phone plan that could be renegotiated so as to save money monthly. Some membership fees can also be cancelled if you are not going to your gym or country club as frequently as you wanted to.

In conclusion, we all love to make more money, but if your monthly credit card bills and interest payments start eating into the amount of money that you make, you will not be able to enjoy the increased income that you are earning. Spend some time considering the above mentioned three simple things that you can do each month and you might start seeing more cash in your bank account that you can use for other things.

Copyright © 2006 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)