How to Avoid Credit Card Delinquency

MoneyMax.ph – Thu, Jul 17, 2014

Credit Card Delinquency

According to a financial risk services company, 15% of all the credit card debt in the country had been reported to be delinquent. Surprisingly, the cause is Philippines’ economic soar – consumer lending is growing and people have been more knowledgeable and dependent on using credit cards but the risk is higher for delinquencies as well.

Just to remind you, here are things you shouldn’t do if you don’t want to be part of the statistics’ delinquent payers:

1. Overspending

The first and most important step on avoiding credit card delinquency is being wise on your credit card use. Discipline will always be the first filter on your spending. Do a lot of thinking before you swipe your card. The basic rule is not to buy something with your credit card that you cannot buy with your cash-on-hand. Control yourself on temptations that may be costly on your part as soon as you receive your bill.

2. Late Payments

When you tend to spend beyond your means, there will always come a point in your cash flow that breaking even is an achievement and late payments are along the way. When you don’t pay on time and in full, your creditor will charge a late payment fee on your bill on the next month which is equivalent to a certain percentage of your outstanding balance. Also, your credit history will suffer and will remain for a long time. Late payments make 35% of your credit score – a big, significant drop could take effect as soon as your bank declares it and later on credit card delinquency.

3. Bank Queries

After all the late and missing payments, your bank will religiously call you for minimum payments. They will just ask you to pay for the minimum amount which is in bold on your credit card statement. Why? Because your outstanding balance will incur interests the next month. If you answer the call and paid the minimum amount, you’re saved for the covered month; they will call you again for the next late or missing payment but if not, they will pass you to the last, daunting step…

4. Third-party Collectors

If you reach this point, your bank must have grown tired calling you for follow-ups. They will dismiss your account and turn you over to a collection agency. They will do their best to convince you to pay your balance. We hope that at this point, you know what to do which is the only thing to do – settle your account. Ask for solutions and haggle for possibilities about your account. Always be honest to them so they could help you accordingly.

When you’re declared as a delinquent payer, your credit history will be at its worst. It will be hard for you to get a personal loan, a new credit card, a mobile plan, a housing loan, etc. Plus, you have to deal with calls, letters from your collectors and will need cash for a long period of time when you need to buy big purchases

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