Credit card debt problems in this day and age are not totally the fault of the credit card holder. People are in credit card debt for all types of reasons and when you realize what has happened in the past you will understand such credit card trouble today. The best way to understand this type of problem and how it has grown so large is to have a knowledge of the recent history of credit cards.
Not so long ago borrowers were required to go to the bank for personal interviews before they could be granted a loan. At this meeting the applicant would be screened to see if they could afford the payments that the new loan would add to their budget. This seemed to work as a check and balance which kept the majority of the population from borrowing more money than they could safely repay.
With the advent of credit cards, a new responsibility was placed on the borrower. It was now left up to them to decide whether they were able to afford the purchases they made with them. As the use of credit cards increased, more people began to find themselves in serious financial problems.
At first this did not cause nearly so much trouble as it does today. In the early years of credit cards, the total balance always had to be paid in full at the end of each month. This kept the borrower’s total debt at a level previously established between themselves and the lender. However as the credit card era progressed, there was a new dimension added which brought with it a new set of problems.
The credit card companies added the flexibility of a minimum payment on the balance, and two things happened. First credit card limits were vastly increased. Then installment purchasing without proper credit counseling became commonplace. As credit limits rose from only a few hundred rands to several thousand, the ever-growing monthly payment became a way of life. This new expanding payment had never before been a part of the average person’s budget. Now impulse items of significant cost could be purchased without any payment planning on the part of the borrower.
Pre-Approved Credit Cards
With this new kind of borrowing came the final blow to the good budgeting habits of the average individual. Loan organizations began to issue credit cards to people without knowing their financial condition. For those with fair credit ratings and substantial incomes, pre-approved cards began to appear in the mailbox. Some of these cards came just days before the already over-extended recipient would have to begin missing payments on other cards.
Today the recipient of these pre-approved credit cards can borrow against their cash allowance to pay the shortfall of their already overspent salaries. With this unsound spending, it isn’t long until all credit cards are charged to the limit, and bankruptcy becomes the next unavoidable step. Within this website you will find a lot of information on the right card for your needs and should help you to avoid the types of credit card debt problems around today.