Are you making mistakes with your credit card debt?
Last Updated : March 17, 2017, 12:51 p.m.
If you are holding multiple credit card and struggling with your credit card debt and finding it difficult to cope up with your outstanding credit card debt then you are trapped in bad credit card debt. To save yourself from this vicious cycle of credit card debt you can talk to the credit card company and ask for credit card debt settlement.
Settling your credit card debt means that you will negotiate with the bank to waive off some part of the outstanding due amount and you get to repay the remaining balance as a few part payments to close the outstanding amount. It helps in settling your credit card debt and helps you in getting out of this trap. It also gives you peace of mind and at the same time bandwidth to save some money as well.
For instance, Shankar Kaul, a software engineer is holding multiple cards as initially he finds it cool and status symbol of holding multiple credit card. But, after some time when he was using all the cards frequently for various reason and finds that he was not even able to pay the full EMI of any of the card. He figured out that his total loan outstanding in his cards is more than Rs. 3 lakhs and in one card out of four it is more than Rs. 1.5 lakh. This is a huge amount and it is not easy to pay off all the debt easily. Therefore, he decided to meet the credit card company for card debt settlement. The bank agreed upon the settlement amount of Rs. 1 lakh and the credit card amount will be settled with no dues pending on his name. This gave him a sigh of relief as he managed to close the biggest amount and now he will be able to pay the remaining credit card debt easily. It sounds more comforting, but actually it is not. To know how it is not really helpful.
Why not to opt for settlement?: If you are thinking for a credit card settlement on your credit card , it is not a good option to choose. Definitely, it will help you in getting debt free and settling the amount, but in long run settling the amount goes against you. If in your credit card report indicates the statement 'Settled' this gives a negative impact. This will affect your credit card report and gives a wrong impression on your credit history.
When you should not go for a settlement: If you are close to 40s or 50s years of age, taking a credit card debt settlement at that time is not the right decision. It can impact your credit history drastically. Reason being, there are still number of years for which you must continue working and there must be many personal responsibilities remained unattained. In that case, if you require any personal loan in future, then this will affect your future prospects of loan borrowing. Having a credit report mentioned as 'settlement' will seriously decrease your chances of getting a loan at good terms.
When you should go for a loan settlement: You should go for loan settlement only if you have no other option left. At that time you should consider taking a settlement of credit card debt. You can take a personal loan or loan against gold or any asset to pay off the credit card debt or paying the maximum EMIs. Taking a settlement should be your last option. Though it helps you in paying the debt with lower amount in two or three installments. But, taking a settlement creates negative impact on your credit record. It will take years and a lot of effort to build a good credit history.