More and more, you may be finding that credit cards are not a luxury, they are a necessity. Getting a hotel room, renting a car, and buying meals require a card.

So as you would imagine, many people that may not have before are aquiring credit cards. In fact, the majority of people have more than one credit card. The credit card industry is growing by leaps and bounds. However, the credit card industry and credit card users are now faced with a huge problem called ‘Too Much Credit Card Debt’. In order to understand what too much credit card debt actually means, we need to understand the workflow associated with the use of credit cards, i.e. What happens when you use a credit card.

Credit cards, as the name suggests, are instruments on which you can get credit, or borrow from the credit card company. Your credit card is a representative of the credit account that you hold with the credit card supplier.

Whatever purchases you make using your credit card are actually your borrowings that eventually make up your credit card debt.

Your total credit card debt is the total amount you owe the credit card supplier. You must settle your credit card debt on a monthly basis. So, you receive a monthly statement (your credit card bill) which shows your total credit card debt.

You must pay off your credit card debt by the payment due date, or you will incur a late fee and interest charges. However, you have the option of making a partial (minimum) payment too, in which case you don’t incur the late fee. The interest charges will contuinue to accrue on your credit card debt however.

If you don’t pay off your credit card debt in full, the interest charges are added to the total debt. Your credit card debt keeps on increasing, more so because the interest rates on credit card debt are generally higher than the interest rates on other kind of loans/borrowings.

Further, the interest charges add on to your credit card debt each month to form the new balance or the new credit card debt amount. If you continue making partial payments (or no payments) the interest charges are calculated afresh on the new credit card debt. So you end up paying interest on the last month’s interest too. Thus your credit card debt accumulates rapidly and soon you find that what was once a relatively small credit card debt total has ballooned into a huge amount which you will probably find almost impossible to pay.

Moreover, if you don’t learn to control your spending habits, your credit card debt rises even faster. This is how the vicious circle of too much credit card debt works. And once you are on this treadmill, it’s nearly impossible to get free of it.