Admit it. Your credit card bill isn’t your favorite mail to receive every month end. But when it arrives with a big figure, reality hits you hard. You just can’t pay it all. So, what’s next?
You are not alone. Most people are having a hard time paying their bills on time and in full too. It could be brought by unforeseen circumstances—from losing track of monthly expenses to emergencies and unemployment.
What Happens When You Don’t Pay Your Credit Card Bill
Often, you won’t think about the consequences of an unpaid credit card bill. First month of missing it isn’t that noticeable. But when you consistently don’t pay your bill, interest rates and penalty fees accumulate which are sure trouble to your pockets.
Late repayments come with penalty fees ranging from 4% to 7%, while compounding interest rates range from 2.5% to 3.75%.
Waiting for more than 90 days isn’t a smart move. Your creditor will mostly likely put your name on the permanent negative record, which can affect your credit score and future loans. But don’t panic! There are many ways to resolve your credit card problems. Here’s how:
1.Pay the minimum amount due
Go for the safest bet when your bill is giving you a headache. Look for the due date and minimum amount due, which is usually 1% to 5% of your bill.
Pay the minimum amount but if possible, pay more than the minimum. Why? Settling a minimum payment isn’t that noticeable when your next bill with interest rates rolls over. And always pay before your due date!
Take note: Your credit card issuer knows how much you earn, so they’re most likely on your side. Just be detail-oriented. Dedicate an amount of savings months ahead, and avoid swiping your credit card unless you’re confident that you can pay your next bill.
2. Negotiate with your creditor
Instead of skipping your payment, why not give your creditor a call?
Inform them about your current situation. It gives the impression that you’re a responsible credit card holder who can pay off your debts. It’s also an opportunity to discover repayment options. Banks usually offer installment plans ranging from 12 to 60 months depending on your credit card debt.
3. Use balance transfer
An interest rate of 0.6% per month is a guarantee win for anyone. So you might consider using balance transfer to repay your bill using a new credit card with a lower interest rate.
Don’t forget to compare rates and compute to know if you’re getting the best deal. You’re transferring your debt to a new card, so be more careful. Think of it as a second chance to be more responsible in tracking your finances.
4.Pawn old items
Being practical in times of credit card problems will take you to places. If you have old items like unused jewelries or gadgets, pawn them at an online pawnshop like PawnHero. It’s an easy way to get extra cash for your credit card bill to avoid interest rates and penalties.
You can also use the cash for shopping or miscellaneous purchases instead of overusing your credit card.
5. Get a professional help
Everyone needs a helping hand in times of trouble. If you found yourself consistently having difficulty repaying your debts, maybe it’s about time to get a credit counselor.
Credit card debts should be taken seriously. Professionals can help you figure out what’s going wrong and how you can solve it. They’ll assist you in rebuilding your finances and negotiating repayment options with your creditor.
Credit cards have a lot of perks, but using it irresponsibly puts you in trouble. Don’t swipe it if you know you can’t pay on time. Remember, think twice before making a purchase.
Latest posts by Gem Muzones (see all)
- The Future of Filipino Shoppers - October 30, 2017
- Scary Financial Moments and How Millennials Can Survive Them - October 25, 2017
- 7 Smartphones You Should Get This Holiday Season - October 23, 2017