Credit card debt is an example of unsecured consumer debt, accessed through 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.
Read more about Credit Card Debt: Credit Card Debt Statistics, Relieving Credit Card Debt, Bankruptcy Concerns, Political Aspects
Famous quotes containing the words credit card, credit, card and/or debt:
“The world is a puzzling place today. All these banks sending us credit cards, with our names on them. Well, we didn’t order any credit cards! We don’t spend what we don’t have. So we just cut them in half and throw them out, just as soon as we open them in the mail. Imagine a bank sending credit cards to two ladies over a hundred years old! What are those folks thinking?”
—Sarah Louise Delany (b. 1889)
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—Abraham Lincoln (1809–1865)
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—Henry David Thoreau (1817–1862)