Refuses Credit Card Debt -A credit card is issued by a bank to the customer, allowing the purchaser or cardholder to purchase goods, items, or services on credit. These items may be anything that the consumer may purchase but limits on spending is put on the credit card. Debit card users spend money on items by drawing on funds that they have deposited at the bank. Credit cards have many advantages like it is so easy for users to get money from the card issuer up to a specific limit, for purchasing items or withdraw money. For example, when a customer purchasing some goods and services through the card system. He/she have to pay the company(bank) for the money he or she has spent. When the user does not pay for the money, Bank will start charging for their goods and services, increase the interest rate and penalties.
How does a credit card work?
There is a chip on a credit card this chip is used for your security or to make your credit card different from others. When you go for purchasing in a place you have to enter a card in a card reader machine then this machine will verify your credit card security code. But when you are purchasing online this is a different procedure you have to give your security code, date of expiration, and your credit card number.
Each time when you’re are purchasing, available credit got down with that amount. For example, you have a limit of 30,000 on your credit card and you purchase less than 30,000 like you purchase products of price 5000. You will have 25000 on your credit card. You will have to pay a bank of amount 5000. If you take another amount from the bank like 5000 again before paying back your previous amount. You would have to return this total amount to the bank and the 20,000 limits of purchasing would be remaining on your credit card.
Rate of interest
Bank will give you a certain period. At this time, you must have to pay back the amount that you borrow from the bank for purchasing. In case you are not paying back the bank amount then the bank will be charged, add interest rate, and penalties. The interest rate is the final amount that you have to return.
Minimum payment no penalty
If you don’t want to add up interest charges, penalties to your debt. Then repay the minimum amount with a due date. If you do this, you haven’t to face these problems.
Advantages and Disadvantages of Credit Card Debt
As we know that everything thing has advantages as well as disadvantages. Just like this, here are some advantages and disadvantages of credit card debt:
1)Cash carrying is not safe as a credit card
When you are carrying a credit card with you while shopping number of chances f losing it or stolen is very less. If you took cash with you there are much more chances of losing and stealing.
2)Stolen cash returned
Mostly banks/companies have different processes of security for the protection of their customers or their credit card. Cards have been lost or stolen or if you have any doubt on your account that it has been used for fraudulent processing of transactions. If you’re finding yourself in these situations. Then write an application to the bank or the company and report the issue.
3) Interest-free for a certain period
Bank will provide you money for your purchasing and gives you a specific time limit for returning. So, it will be helpful for a purchaser.
There are reward earning programs in most banks so when you spent money like for groceries and electricity, gas costs. Through these programs you can earn reward points, through these points you can get a reward like tickets of flights with your partner, products from the rewards store, or cashback.
5)Purchasing in any currency
In most companies, currency conversion fees apply. But customers can purchase products in any currency, you can also use your credit card to make purchases in foreign currency. These credit cards are helpful in international purchasing.
6)Helps in online purchasing
You can use your card to purchase your products online safely, even from international retailers. It makes your online purchasing safer.
1)Interests rate are so high
Credit cards are not acceptable as much because of high-interest rates. The bank or company will charge you due to making your payment late. Charges will add in no time and they are added to your balance. This means your fees are then charged interest as well. For example, you are carrying money from the bank month by month, you will have to pay interest charges. You can end up paying hundreds or thousands more than you initially charged in interest if you’re unable to make repayments each month.
There is a lot of fraud schemes that negatively hit your credit cards. Like you can be compensated for illegal transactions on your account, Maybe the bank or company will help you in this fraud, but still, it will be a time-wasting, bad and stressful experience for you.
3)Future Income effected
It affects your future income because you’re borrowing money from the bank/company. Maybe in the future, you don’t have money. So the bank will take this money by reducing your income.
Carrying a credit card doesn’t improve/increase your credit card history or credit card score.
As we know about credit card debt but what will happen if someone refuses to pay credit card debt?
If you will not pay your debt in a certain period. You have to face many problems in this situation. There are some agencies for that type of case called agency collection. If you’re are not paying debt your account will send to agencies, then these agencies will handle your case. If you don’t want to pay credit card debt you have to know about the problems that you will face. Here are these problems. The following problem will help you to understand
1)how to make your credit card debt payment quickly?
2)what you have to do if you get late while payment?
3)what will the bank do if you don’t pay your small payments?
4)what will happen if you do pay your maximum debt?
5)how to pay off credit card debt?
6)is credit card debt affect your credit score?
7)late credit card debt affect your life financial?
8)what happened if he/she dies who will responsible for his/her debt?
Initially, if you’re are not paying your debt then you have to pay penalties on your using amount. Like you have spent 70,000 in online shopping and you don’t pay this amount to the bank in a specific period given to you from the bank. Then you have to face extra charges. After passing this time limit your amount (70,000) will increase according to the interest rate. If the interest rate is high, then your debt amount becomes large.
3)Freeze your card
If you are not able to access your credit card its means your account gets freeze. It means your credit card will be frozen if you don’t pay credit card debt. Then you will not be able to purchase any goods and services. Without giving any notification or letter debt collectors can’t freeze your account. They can freeze your account based on judgment. If you will repay the debt, then your account release automatically.
4)One month late on a payment
When you make one month late on payment then members of the company or bank will contact you through emails, letters, or mobile calls. If you avoiding these calls and never make a conversation with these members makes this situation worse. If you give a response quickly it will make the situation easy for you.
5)Two month late on a payment
After one month, late payment passed. If you got late still on two months’ late payment, then you have to face problems related to finance. This is the second stage for you if you are not paying credit card debt. In this stage interest rate increases, rate of the penalty also increases. Over time this interest increases.
In this stage, your credit score also got affected
6)Report on payment history
If you’re not paying credit card debt, the bank or company will make a credit report. In this report, all detail is given about your history payments like how much have you taken loan? How much you used credit in your past included as well as how much have your debt? The report consists of this type of information. You can check this credit report at any time. If you’re not paying, then this report will be sent to agency collection.
7)Three month late on a payment
If you missed your second payment, then your case becomes critical. This is the critical stage of your case. There is the possibility of your account may be closed or the company/bank will hand over your case to the debt collector. Debt collectors are members of the collection agency and financial protection agency. They will collect the debt from you if you are not paying. In case of still not paying credit card debt, this agency will take action legally. These legal actions are changed from country to country.
The debt collector will do this under the law if you are paying a debt
- Firstly, they identify the person who is not paying a debt. Collect information about this person from the bank or card issuer company.
- Secondly, a debt collector will send you an application/letter/email of the debt.
- They are also responsible to provide a credit report on your request if you want to know.
- There is official timing 8:00 am to 9:00 pm in which they call you and you have to give the response to them.
- If you’re not able to repay or you are a minor then collectors will contact third parties like your neighbors, parents, relatives.
- If you are not giving a response to the collectors, then they will be able to seize your property and take legal action against you.
Debt collectors decide according to their policy or instructions. You have to accept this decision if you would not accept their decision or don’t give a response on the decision. Then debt collector will repayment debt forcefully. Maybe they seal your house, take your property under them. Or Maybe gives you suggestion like small payment on weekly bases. If you ignored court orders. There is the possibility of arresting you by police. This will make your situation more worst.
If you want to avoid all that type of legal action, then follow these instructions:
- Deal softly with debt collectors, for example, you make lame excuses or fake promises then this will provoke the debt collector to sue you.
- Contact counselors or agencies who help you in this situation. These agencies are a great source of information; this information is very helpful for you in debt issues.
- If the court wants you to appear then follow the court orders. Contact any lawyer or person who will defend you in court.
10)Person will pay a debt if he/she dies?
If a person with credit card debt dies, then who will be responsible for the debt? When we talk about this situation. Then two things happen will happen in this situation. Late fee charges will not b considered in this situation. But debt has to be paid. When the person got dies the second party will be responsible for his/her debt. Like if the husband got died, the wife will b responsible for his debt. She has to pay his credit card debt but without late fee charges.
11)If you leave your country without paying the debt
If you leave your country without paying a debt. Bank will take your property, your aspect if you have in this country. There are no history payments records in another country. But if you want to take a new credit card you have to mention your residential address or all information that is needed.
How can you deal with your credit card debt?
- Avoid taking cash in advance: When you are taking cash in advance through your credit card its means the bank will highly charge you, add a large amount of interest, add large penalties. If you don’t want to face such problems, they must avoid taking cash in advance.
- New card opening: If you are paying your debt by using another credit card then it is easy for you. But in case you are facing financial problems. You will be unable to pay a debt of another new credit card. New card opening will also become a problem for you. More cards will encourage you to make more purchasing too much spending means too many problems. When you have too many cards it becomes difficult for you to take records of your purchasing.
- Report on your credit card debt: Bank will have a credit card debt report. You will check this report regularly it will help you to have a look at your repayment. Always check your credit card debt history.
- Small payment: If you are facing financial problems like less income, late incomes. Then must pay your debt back to the bank for avoiding penalties. After some time, you will pay all debt. It took much time but easy for the person who is facing financial problems.
- Counselors: There is a counselor who gives you advice if you feel stressed due to credit card debt. But if you have some questions related to credit cards you can make contact with a bank.
Check your credit card limit:
- When you are purchasing some products before it takes a look at your credit card limit.
- Check interest rate: Check your account weekly it will help you to understand how instantly adding up the interest rate. Maybe this interest rate will inspire you to pay back the amount to the bank more quickly.
- Make your budget this way: If you want to make your budget properly then don’t use your credit card much for purchasing. Always use a credit card for groceries, electricity bill payments, gas costs, and car service. In this type of purchasing you have to need small amounts then use your credit card debt. Just use this credit card in this type of situation. If you have any financial problems, then don’t use the credit card for much purchasing.
- Bank instructions: Read bank or card issuer’s instructions very carefully. Nowadays there are instructions copy as well as webpages of credit card issuer company. All information is given about interest rates, penalties. All conditions and terms are written on their websites. This information will help you a lot in making decisions like how much debt you can afford.
- Precautions: If you can follow all precautions take care of all terms and conditions given by the bank or card issuer company or repay your debt with a due date. Then your credit score affect will in a positive way.
- Don’t rely on credit card debt: Don’t rely much on credit card debt like you want some expensive shopping. But you have a financial problem as well then don’t use your credit card debt because it will affect your income badly. Follow all the guidelines it will make your life easy.