Credit Card Balance Overdue Hazards & Remedies Explained
Last Updated : June 25, 2019, 11:55 a.m.
Ravi Bhasin, a 25-year old IT professional working in a Mumbai-based MNC, was in no short of delight as the bank nods his credit card application some two years ago. Ravi got the approval to a card which he wished for and so, the happiness resulting from that was palpable. In the first six months, the card shopping experience was wonderful for him with a flurry of rewards and discounts.
But, thereafter, he got sucked into a reckless spending routine without actually giving a thought to prioritize his spends. It resulted in towering card dues that have not only forced multiple defaults from Ravi but have also dented his credit profile by lowering the credit score.
Even you can get caught on the wrong foot on failing to use your credit card properly. A few hazards await with a credit card balance overdue, which results from revolving credit by not paying the total dues, failing to pay even the minimum due, and constant payment delays. Hang on, we are not going to talk about the hazards alone. The focus would also be to suggest appropriate solutions to help you get out of the same, if at all you are trapped.
Tall Interest Charges
The best part about credit card is that there won’t be any interest if you pay dues in full and on time. But on non-payment or the payment of partial amount would lead to interest charges at the rate as much as 30%-40% per annum, quite high to bother you, right?
Remedies
The solution would be to stop making fresh spends via the card and look for a suitable personal loan, which can be given at lower rates of 11%-25%, to pay off the debt easily The loan application may get rejected if you have defaulted on your dues. If at all that happens, you can then request the lender to convert your credit card outstanding into EMIs , which stand for Equated Monthly Installments. The EMI option can be given to you at 13%-25% interest rate for tenures of as long as 4 years. However, not all the due can be converted into EMI. As a matter of fact, banks allow conversion of those purchases into EMI which are not more than 30-60 days old. The other solution would be to transfer the outstanding credit card balance to another lender at lower rates. It will make the repayment easier.
Penalty Charges
The balance overdue could result from the non-stop late payment charges on failing to pay dues on time from one billing cycle to another. The charges can be anywhere between ₹100-700, depending on the overdue amount. Plus, there will be levies of interest and Goods and Services Tax (GST) to increase the dues further. So, you can get an idea of the strain your finance is going to face following this bad credit routine.
Remedies
Control your impulsive urge to keep the bill to an amount that you can pay on time. With that, you eliminate the scope for interest and tax, provided you are paying dues in full. Plus, you can make an agreement with the card issuer to reschedule the due date if your salary arrives later to the same. The lender can thus change the date to enable a timely payment.
Credit Profile Worsens
Constant late payments can impair your credit history , if not lower your credit score. The score ranges from 300-900, with 750 and above being considered excellent. Even if the score is good, a late payment riddled credit history can dampen your future credit aspirations.
Remedies
Prioritize your spends according to your income and needs. Make sure not to utilize more than 30% of the limit offered to keep the bills payable on time. A timely payment routine would gradually raise your score and improve your repayment history at the same time.