Credit card debt
A problem called ‘Credit Card Debt ‘
Credit cards are virtually a necessity now rather than a luxury. So it makes sense that many people would choose credit cards. In actuality, many people own multiple credit cards. Therefore, the credit card sector is expanding rapidly. However, a significant issue known as "Credit Card Debt" faces the credit card business as well as cardholders. We must comprehend the process involved in using credit cards in order to fully comprehend what the term "credit card debt" actually means.
As their name implies, credit cards are cards you can use to obtain credit, or borrow money (your credit card debt). Your credit card serves as a representation of the credit account you have with the issuer of your credit card. Any payments you make on your credit card are really borrowings that go towards your overall debt. The total sum you owe a credit card company represents your overall credit card debt.
Your credit card debt must be paid off each month. As a result, your entire credit card debt is displayed on the monthly statement or credit card bill you receive. Your credit card debt must be settled on the payment due date to avoid late fees and interest charges.
However, you also have the choice to make a partial (minimum) payment, in which case you only pay interest on your credit card debt rather than a late fee. Your credit card debt will accrue interest fees if you don't pay it off in full. Due to the fact that credit card interest rates are typically greater than those on other loans and borrowings, your credit card debt keeps growing.
Your credit card debt also increases each month as a result of interest charges, creating a new balance or total. The interest charges are recalculated on the new credit card debt if you keep making only partial payments (or none at all). Thus, you also wind up paying interest on the interest from the previous month.
As a result, your credit card debt mounts quickly, and you soon discover that what was once a manageable balance has grown to a size that you find difficult to repay. Additionally, if you continue to have problems with your spending, your credit card debt will increase much more quickly. The vicious cycle of credit card debt operates in this manner.