How do people run up so much credit card debt?

I had never really thought about this before, but how do people run up thousands of dollars of credit card debt when every card has a credit limit? Do they just have really high credit limits or have many different credit cards?|||You should be asking why credit card companies flood the population with so many credit cards which are unsecured debts that are not backed by anything. The truth is that once your credit card debt is greater than 20% of your annual take home pay, you're unlikely to ever ever pay off your debt. Recent reports show that of those credit card accounts that are closing these days, it'd due to people defaulting and not due to them paying off the credit cards and closing them voluntarily. Of course what do you expect in the US when the unemployment rate is 23.1%.





It's no secret that without a savings account most people view their credit cards as their emergency fund. 77% of Americans today live week to week and don't even have $1000 in the bank for emergencies.





A lot of people start off with good credit, get a number of credit cards, usually rolling over their balances to a 0% APR for one year to manage their affairs, then when something happens such as a lay off, medical illness, divorce and such, they tap into those high credit limits until they are way over their heads. My parents racked up $6000 of credit card debt paying for my sister's wedding. My sister racked up $5000 while married to the bum and she's now divorcing him. I racked up $22,000 after my job cut my pay, cancelled over time and bonuses and I got a premonition that I'd be laid off in a year. It took eleven months for them to lay me off. Turns out after reading the FDCPA, I didn't owe a dime to the third party collection agencies.|||People run up credit card debt when they don't pay the bill on time. You are allotted a certain amount of credit, but at the end of the month you have to pay it off. You can pay the minimum or you can pay the off the whole bill. When people don't pay the bill at all, or they pay the minimum, they begin to accrue interest on the money they didn't pay. The reason they end up getting so deep in debt is that the interest tends to be rather high, up to about 27% if you have no credit. So do the math, if you have a $500 bill and you only pay the $15 minimum, you're accruing %27 on $485. Give a few months or years and that's a whole lot of money you owe the bank.|||It starts with a car loan, usually. Then the offers for credit cards come in the mail because the bank and/or the credit bureaus sell certain "profiles" or in other words, people with good payment histories. Many people get several credit cards because some really good offers come in the mail. (Low or no interest rates, points for air travel, etc). There are a couple of scenarios as to what happens next. One is the person can't control the urge to buy, buy, buy, with the new found "wealth". They charge a bunch of stuff, and start off making the payments. This leads to a higher credit score of course, so they get more offers. It goes on until that person can't afford the payments any more. But in the mean time they have debt going up to about $15,000 or so. The other way is, they get the cards, don't use them much but then something happens. The loss of a job, health issues, unexpected home repairs, etc. The last way is they had a good job, and decided to open their own business in some way. They use the cards to finance it. More than half the new businesses that start end up Out of business in less than a year for whatever reason. In the mean time they have been buying everything on credit hoping for the big payout from their new business and it never happens. How does it happen? Some high credit score people, with just $30 to $40k incomes can get one card with a $5k limit. A couple of those and several smaller amounts, and there you go. Higher incomes, get higher limits, and low risk people (seniors for example) also qualify for higher limits if they retired with good credit scores.|||The greed of all credit card company, compounded with the stupidity of the person running up his/her own credit card balance, that how.


Lets say you have 3 credit cards, all with $2000 credit limits, you slowly spend up to the limit of all 3 cards, all you have to do is request limit increase from all 3 credit card company. They will review you payment history, if you pay on time, even paying the minimum, they will increase the credit limit for you. Also, other credit card company see that you always keep good payment history, they will pre-approve you for a new card.


So, you have more and more cards, higher and higher limit, your total unsecured debt will go thru the roof someday. I have seen people do cash advance on one card and use the cash to pay minimum payment on other cards.|||Actually, even with the credit limit to each card, people can still run up so much credit card debt because of finance charges and other charges if you pay only the minimum payment every month.Therefore, if you have about 10 credit cards with each piling up with penalties, it is possible for your debt to rise to thousands. However, running up so much credit card debt is not the real problem. Getting out of credit card debt is the real problem.|||They start up with really good credit so they have higher limits, then the economy gets to them then they buy everything they want until they go bankrupt.|||They run it up because they are complete idiots no exceptions or excuses. Oh I lost my job-you should not have had the balance to start with. I "needed" no you wanted. Medical bills pure b/s every state forces hospitals to accept payment plans and you cannot be denied emergency care in any hospital ever by both state and federal law. As to none emergency you cannot be denied in so called none profits as long as you are making payments and most states only require $25 per month regardless of the amount owe. Pure ignorance, stupidity or not giving a damn is the only reason people have CC debt|||They run it up one charge at a time. If you have cards with 10k limits its easy to go pretty high. I once charged $5000 worth of airline tickets. Of course the next thing I did was write a check to pay off the card, I have no intention of running up a debt.