Reasons Why You Could Go Into Credit Card Debt

Having credit card debt is scary, as you suddenly get that feeling of panic, wondering how you are going to pay off the balance.  The problem is, the higher the balance that your carryover each month, the more interest is charged, and little of the principal balance will be chipped away and more will go towards interest, making larger payments more and more necessary if you want to see a decrease in the balance.  Credit card debt can be pretty easy to fall into, especially if you follow a few of the common behaviors.

Charging Just for the Rewards

Of the best reasons to use a credit card, and why some use one for every purchase, is for the credit card rewards, which can come in the form of airline miles, points you can redeem for gift cards, or a good old-fashioned check that you can get back once a year.  If you use a credit card for the purchases you were going to make anyways, it would be like leaving free money on the table if you didn’t use it, if you figure in the rewards, but as you watch the rewards pile up, it may tempt you to go overboard just for the rewards.

No Emergency Fund

One way you can go into credit card debt pretty easily is if you have a major unexpected purchase come up that you don’t have money set aside for and put it on a credit card, such as an auto repair or vet bill.  If you can put a few months’ worth of expenses in an account that you can have as a cushion, you can prepare yourself for any huge purchase that may come up without worrying about how you’re going to pay for it.

Cash is Long Gone

Back when cash was used for purchases you could at least see it leave your hand and go into the register, making you give second thought to making a purchase.  When using a credit card, there really is no stopping you, I guess until you hit that credit limit.  Using a debit card at least gives you thought of the money leaving your bank account, but a credit card almost feels like pay money since you really can buy what you want, that is until the statement balance comes in and gives you a shock of a balance due shortly.

Too Many Unnecessary Purchases

When it comes down to it, you can be prepared as you need to be, but it matters where your money is going, and outside of necessary monthly payments, it’s the extra purchases that get you, such as eating out, going on shopping sprees, or hitting the bars.  While sure those are fun to do, but should be done in moderation.  Try taking last month’s credit or debit card statement and add up all of the charges that probably could have been avoided, and that’s how much extra money you could have to pay off debt, build your emergency fund, or use to save for your future.