Borrowing money on a credit card is expensive. Nearly 44 percent of credit card holders carry balances despite the cost value. A significant burden for U.S. households is represented by borrowing financing credit card . it was reported that the average debt level by individuals with card balances was around $5,000 in 2004 dollars, financed at an average rate of over 11 percent per year. Financial distress created by unmined credit card debt may contribute to the high rates of personal bankruptcy filing. The main problem of high expense of carrying credit card debt, specifically in terms of the apparent availability of lower-cost alternative financing, has led researchers to examine the underlying determinants of card borrowing. This research has followed two primary paths. Firstly, traditional economic reasoning explains the carrying of high credit card debt as cost-minimizing behaviour, accounting for reasoning, financing consumption with credit cards may actually be less expensive, not more, than plausible alternatives, when costs associated with insufficient liquidity, arranging alternative financing, and switching credit contracts are fully taken into account.

Whereas secondly, a behavioural view of carrying credit card debt has been linked with card borrowing with self-control problems. Credit cards usually separates the enjoyment of consumption from the pain of paying for it, which might be particularly attractive for individuals who disproportionately overvalue present consumption and undervalue future cost.

People have the belief of savings growth as linear rather than exponential, hence underestimating the benefits of saving now as opposed to later. The survey was either distributed by mail or administered on the Internet; 3,008 individuals over 18 years of age across the United States responded, with a response rate of approximately 15 percent.

Both behavioral and traditional approach has been revolving credit card debt is suggesting that individuals who carry a balance on their credit cards should be more likely, all else being equal, to as a substitution of credit cards and into alternative payment methods for purchases.

Using a personal loan to  pay off credit card debt might work as a good option if you can find one that has a lower interest rate than your current credit card. It will enable you to pay off more of your debt principal each month, which would help you eliminate the debt faster than if you kept it on a high-interest credit card.

To release yourself of mounted debts you need to set a budget for your household. Take advantage of free budgeting tools online which will enable you to track your spending across all of your financial accounts.

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