One of the types of debt that many folks across New Jersey struggle with the most is credit card. This may be because credit cards are widely used and are made available to nearly everyone. Unfortunately, many credit card users end up with at least some amount of debt.

People with credit card debt often feel stressed out, upset and confused by mounting credit card bills. On one hand, they may have gotten the card in the first place to build credit but on the other hand it can feel like the whole system is working against consumers. Late payments and interests can add up very quickly and end up burying a person in debt making it difficult to pay other expenses. By this point many people may be wondering why we even have credit cards.

A recent article in “Forbes” magazine took a look at just what credit cards are, how they are used and why they can be trouble for many people. Understanding the basics of credit cards may help people understand their own debt and hopefully avoid certain missteps in the future.

Credit cards are used when a person wants to use a bank’s money to pay for something instead of their own and agrees to pay the bank back at a later time, usually with interest. There are many reasons that people choose to use a credit card instead of cash to purchase something. They can earn rewards, have the ability to cancel a transaction or they may not have all the money required at that time.

People are then supposed to either pay the bank back in full or make smaller monthly payments until the balance is cleared. However, many people cannot pay off the full balance and run the risk of being late with a payment. If this happens, late fees and interest rates can make a relatively small balance balloon into an unmanageable sum.

Credit card debt can be a slippery slope. Many people open a line of credit with the intention of creating a good credit history, but the truth is that many people fall victim to high interest rates and penalties set by banks looking to make a profit. However, there are certainly debt relief solutions, from debt reorganization to bankruptcy, that are available for those who are dealing with credit card debt.

Source: Forbes, “Credit Card Basics: Everything You Should Know,” Luke Landes, June 11, 2013