A credit card is a great financial tool that can help you manage your daily expenses. However, if you mismanage your credit card spending, it can be a huge drawback as well. Once you’re given a credit card, it’s your responsibility to manage your spending and make payments on time. Expect the following if you fail to make your credit card payments:
Increase in Interest Rates and Penalty Charges
When your credit card is almost maxed out and you’ve missed a few payments already, expect to pay a higher interest because of a higher outstanding balance. If you pay after the due date, you will also be asked to settle a late payment fee.
Credit Card Suspension or Cancellation
The next thing to expect is for your bank or credit card issuer to suspend or even cancel your credit card. If you still haven’t settled your credit card dues after three months, you’ll lose your credit card privileges, and your credit record will take a hit.
Once your card is canceled, your name will be included in the negative list that financial institutions in the Philippines check before approving loans and credit card applications. This will definitely make it harder for you to apply and get approved for any type of loan in the future.
Demand Notice from Credit Card Company
If after several months the credit card dues remain unsettled, the bank will send you a demand notice to pay your credit card dues ASAP.
Negative Impact to Your Credit Score
As a result of not being able to honor the terms and conditions of your credit card, your credit score will be negatively affected, of course. All those missed payments, credit card cancellation, and demand letters will reflect on your credit score.
Your credit score is very important because it shows how creditworthy and financially responsible you are. A badly managed or canceled credit card makes a huge negative impact on your credit standing. And when you have a poor credit standing, financial institutions may find it harder to approve you for loans or credit cards.
If after receiving the demand notice from the bank you still aren’t able to pay off your credit card dues, the bank can take legal action. A civil suit can be filed, after which a collections agency will take over collecting payments for your unpaid credit card.
What to Do With Your Unpaid Credit Card
It’s nice to have the spending power of a credit card. But if you don’t know how to manage your spending and can’t pay off your dues on time, the charges can snowball and overwhelm you financially. Still, there are steps you can take to avoid credit card delinquency.
A credit card should be a tool to help you manage your budget better. Choose a credit card that will help you track your purchases so you can spend responsibly. RCBC Bankard has a Spend Monitor feature that allows you to set your budget and provides an alert when you have already spent 80% of your pegged budget. It also has a Spend Analyzer feature which allows you to track your monthly and year-to-date spending on a per category basis so you’ll know what you’re spending on and if you need to cut-back on some expenses.
Don’t Skip Payments
Remember that paying the minimum amount due is better than not making any payment at all. For the time being, you can make the minimum payments until your finances get better. When you have more breathing room in your budget, you can make bigger monthly payments and reduce your credit card balance. Just take note that if you pay only the minimum amount due and keep making new purchases on your card, you may find it harder to reduce your total credit card balance.
By paying your credit card bills on time consistently and being responsible with your card, you improve your credit scores in credit information agencies that banks regularly check. This will make it easier for you to take out a loan in the future, especially when you have bigger financing needs such as taking further studies, buying a car or building your home.
Transfer Your Credit Card Balance
If you want to consolidate your credit card balances from multiple credit cards, you can also opt for a balance transfer. This way, you only need to manage one payment, making it easier for you to track due dates and set aside a monthly payment. With a balance transfer, you can also find a credit card that has a lower interest rate, which can be very helpful if you want to avoid the hefty fees while paying off your card. If you do not have an RCBC Bankard yet, transfer your other credit cards outstanding balance to RCBC Bankard. It offers low interest rates on Balance Transfer transactions.
Consider Debt Restructuring
Lastly, renegotiate with your bank. Some banks can arrange a payment plan so you can repay your debt in monthly installments over a longer period. Just make sure you can provide proof that you can make your repayments with no hitch. Most banks in the Philippines offer debt restructuring to help out their clients during financially challenging times. An option such as this one is better than clients defaulting on their accounts because of late or no payments.
Choose the Right Credit Card
A credit card affords you a world of exciting deals and discounts. How you use it can also determine your eligibility to other financial products in the future.
So use it responsibly, and pay your credit card bill on time.
This starts by choosing the right credit card that will help you manage your budget, keep your transactions secure, and offer you great rewards with your spending. If you’re shopping for a new credit card, there’s a right RCBC Bankard credit card that will suit your budget, needs, and lifestyle.
In addition to Spend Monitor and Spend Analyzer, RCBC Bankard has another innovative way of helping you manage your payments through Unli Installment. It is a unique facility that allows you to pay for your straight purchases made anywhere (including online and overseas) to up to 36 months installment and you can do the purchase conversion easily through the RCBC Digital app!
Find out how you can get an RCBC Bankard today. Visit our website and connect with us on our official social media accounts. RCBC Bankard is always just one call or click away.