Credit card debt incurs when you pay for items or services using a credit card and do not pay it off. This type of debt is known as an ‘unsecured debt’, meaning it does not offer the added protection of a guarantor, or collateralize specific assets belonging to the borrower in the event of a liquidation, bankruptcy, for failure to adhere to the repayment terms.
Credit card debt is among the most common personal debts. The buy now, pay later mindset can lead to overspending if left unchecked, leading to spiraling financial issues. When ‘later’ arrives and the cardholder must pay for the goods that were purchased (typically consumer goods like clothes, groceries, services and holidays) as well as charges and interest, the balance may have grown beyond what was anticipated, leading to problems with repayment.