Credit card debt is an example of unsecured consumer debt, accessed through ISO 7810 plastic credit cards. Debt results when a client of a credit card company purchases an item or service through the card system. Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent. The results of not paying this debt on time are that the company will charge a late payment penalty (generally in the US from $10 to $40) and report the late payment to credit rating agencies. Being late on a payment is sometimes referred to as being in "default". The late payment penalty itself increases the amount of debt the consumer has. When a consumer has been late on a payment, it is possible that other creditors, even creditors the consumer was not late in paying, may increase the interest rates the consumer is paying. This practice is called universal default. Nowadays, credit card debt is a burgeoning problem on campuses. Although most students handle credit well, a significant minority get into debt.


Causes
One of the following causes of credit card debt might mirror our financial situation:

• Excessive medical expenses: If one of our family members suffers serious illness and our health insurance cannot cover the medical bills then our credit cards are probably the only source of funds to pay off the difference.


• Gambling: Gambling is fun and entertaining but if it becomes addictive it'll be hard to stop. This won't become a problem if we spend our spare money for gambling. But borrowing money through our credit cards for gambling will surely lead us to a financial disaster.


• Reduced or lost of income: A divorce, death of spouse or unemployment may cause a serious debts. If there is a huge gap between income and expenses, the easiest way to fill in the gap is with credit card debt.


• Poor money management: Do we really know where our money is going? What percentage of our income have we saved each and every month? If we don't have an income and spending budget chances are, we cannot set aside some money for saving and emergency needs.

• Only sign up for companies that are willing to offer us a low percentage rate.


• Avoiding the expensive purchases and not buying things that you don't really need on credit is an important step to getting on the right track.


• We should pay off whatever we can as soon as you can do it, so our balance not grow exponentially as time passes.


• We have to make sure you are also reading all of that fine-print that comes along with the agreement, because there could be hidden fees that we want to know about ahead of time.


• Being aware, and being conscientious about our payment schedule are just a few little things that could keep us from adding to a debt we may have already created.


• Don't ever use credit cards to reward ourself for a good day, or to fulfill a bad day by trying to cheer ourself up with a purchase.


• Keep our credit card spending to amounts that we know we can pay off, don't go over-board with unnecessary purchases, and budget how we plan on paying back our charges.