Along with using a credit card, you have to pay your credit card bill on time. If you do not pay your credit card bills on time, you may be reported as a credit card defaulter.
Through this article we will discuss about credit card defaulter. We will find out what is a credit card defaulter? And when and why is a credit card user declared a defaulter? We will also see what are the consequences of declaring credit card default? And how do you deal with a credit card default?
Credit Card Defaulter?
Credit card default occurs when a credit card user fails to pay his credit card outstanding bill for a long period of time and such a person is called a credit card defaulter. If the credit card user does not pay even the minimum payment amount of the credit card bill continuously for 6 months, then he is put in the defaulter list. Thereafter the credit card account of the customer is immediately deactivated.
If you do not pay your credit card bill in full but pay only the minimum due amount, you can continue to use the services of your credit card. But if you neither pay your credit card bill in full nor pay the minimum due amount for 6 months, then you are put in the default list.
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How Does A Credit Card Default Happen?
When taking a credit card you have to accept the terms and conditions of the credit card. The terms and conditions of the credit card also mention that you have to pay your credit card bill on time or you can also pay the minimum due amount of your credit card bill.
If you do not pay your credit card bills continuously for 6 months i.e. you neither pay your credit card bill in full nor pay the minimum due amount then your credit card can be declared as defaulter. .
If such a situation arises, the credit card issuer will first send you a notice via email and SMS asking you to pay your credit card bill. Also you are asked by the credit card issuer through a phone call to deposit your credit card bill within a specified period.
If you do not pay your credit card bill dues within a specified period, your credit card account is closed and your account is reported as default to the credit card bureaus.
Consequences Of Credit Card Default
If you are declared a defaulter due to not paying your credit card bills on time, it may have the following consequences-
- Black List:
After declaring a credit card user as a defaulter, he is put in the blacklist by the credit card companies and this information is given to the credit bureau. The information of the blacklisted credit card user reaches all the banks and lending agencies etc. Being blacklisted makes it very difficult to get a loan in future.
- Credit Card Block:
After the credit card company declares the credit card user a defaulter, his credit card is blocked. After blocking the credit card, the card holder is not able to use the services of his credit card. Until you settle your dues, your credit card remains blocked and you cannot use it at all.
- Legal Action:
You can also be subject to legal action if you do not pay your credit card bill to us. You can be sued civilly by the credit card company and the matter can go to court.
- Access to Credit:
Once a credit card user is blacklisted, he faces great difficulty in taking loans in future. He is not able to get any loan easily.
- Recovery Agent:
After being put in the defaulter list, the credit card issuer provides some time to the credit card user to clear his dues. If the cardholder does not clear the dues within this time, the bank reserves the right to send a recovery agent to your home. The defaulting credit card holder is contacted by the recovery agent and asked to pay his bills immediately.
- High Interest Rates:
After being put in the defaulter list, it becomes very difficult for you to get a loan. Even if you get the loan, you have to pay very high interest rates.
- Credit Score:
The credit score gets affected after being put in the defaulter list. This lowers your credit score and makes it difficult for you to take any other loan in the future.
- Asset Acquisition:
If a credit card user has taken a credit card by mortgaging any property, then the bank has the full right to sell that property in case of default. The bank can also sell your other assets to which the bank has access to recover its dues.
Options For Dealing With Credit Card Default
- To avoid being a credit card defaulter, you should pay your outstanding bills on time. If you pay your outstanding bills on time, your credit score also gradually increases.
- If you are not able to pay your credit card bills under any circumstances, you can also file an application for bankruptcy.
- You can also choose to pay your credit card bill in easy monthly installments by transferring it to another credit card through the balance transfer facility. Through this you can gradually pay off your credit card dues.
- You can also take a personal loan to clear your credit card dues. You can opt for personal loans that are available at lower interest rates as compared to credit cards. Through this you can clear your dues.
- You can also request to convert credit card outstanding amount into EMI. Through this you can gradually repay your credit card outstanding amount.