Credit card debt refers to the position of owing money on credit card, whether it is incurred from purchases, the card’s interest rates, or both. Due to the accessibility of credit cards, in terms of both procuring one and making purchases with it, credit card debt is one of the most prevalent types of debt.

There are several factors perpetuated by credit card companies that contribute to their members finding themselves in credit card debt. For example, credit card companies will often automatically increase the spending limit of credit cards for customers who consistently pay the balance of their bill in full and on time. With their limit increased, customers are more likely to spend more over time, and thus more likely to incur interest for the credit card company.

Credit card companies make the majority of their money on interest rates, which can be upwards of 30% and contribute immensely to credit card debt. Certain credit card companies also apply an annual rate to their cards, which is sometimes only advertised in the fine print of the card offer. These rates are often applied to cards which offer rewards, such as in the form of gas or frequent flier miles, to entice the customer.

There are also several damaging spending habits that contribute to an individual finding him or herself in credit card debt. Since major credit cards such as American Express®, Visa® and MasterCard® are accepted virtually anywhere, customers can have a tendency to spend more than they would with cash. Credit card companies also offer a “cash back” option at various ATMs, which enables customers to retrieve cash using their credit card at a high interest rate. Individuals that cannot secure loans from a bank or other lending institutions are also more vulnerable to credit card debt, as it can be easy to make down payments on major purchases with a credit card.

Individuals who wish to avoid or minimize credit card debt can do so by implementing precautionary measures into their spending habits. Credit card customers who find themselves unable to risk the temptations of “impulse buying” or splurging on unnecessary expenditures should limit the amount of credit cards they carry and abstain from paying off one credit card with another. They should also pay off the balance of their credit card in full by the pay date whenever possible. If it is not possible to pay the full balance, customers should at least make a portion payment by the due date.