Consequences of NOT paying Full Payment on Your Credit Card Bills
Failure to pay your required minimum balance on your credit card bill can result in a number of consequences. For most people, credit cards are convenient financial tools that empower you to “buy now, but pay later” while enjoying exclusive privileges from a vast network of merchants. As credit card charges pile up and your balance creeps closer to your credit limit, it can become difficult to pay your credit card bill even the minimum monthly payment, let alone settle our outstanding debt.
See the problem with many credit card holders is that they needlessly spend money using their credit cards. They probably do not know that the interest rates when compounded could badly hurt their ability to settle the debts on time. Notice that when you apply for financial assistance or services, the company will always take time to check your credit ratings. That is why it is necessary to take good care of your finances. Here are some of the common consequences that bad paymasters suffer.
#1 High (and compounding) interest charges
The most immediate consequence of failing to pay your credit card bills is the accumulation of additional charges and penalties, such as late payment fees, and most importantly interest charges. Interest is charged, and compounds on a monthly basis. Compounding interest means you pay interest upon all accumulated credit card purchases, late payment fees and even accumulated interest amounts.
# 2 Bad Credit Ratings
The next, very common consequence is a bad credit rating. If you default on the payment once, you can freely ask the financial institution for leeway, but repeat offences of late/ non-payments will have a permanent effect on your credit records. When you have a bad credit rating, you will find difficulty in applying for other financial services, or be slapped with higher interest payments. In addition to that, when you apply for such, you will have little to no chance of approval. This would come as a huge blow to your financial records as well as your freedom to apply for future financial assistance.
# 3 Demand Letters and Law Suits
The things you may expect when you fail to pay for your credit card bills over the long term are demand letters. These are sent to you in the event that you fail to pay the bills on time. After the first and second demand letter is received and still you refuse to pay for your bills then they may pressure you into paying via summons and lawsuits. This is now the serious thing that you should not fail to address.
In the Philippines, you will not be imprisoned for failure to pay your debt. However, you should know that your property and other assets may be liquidated to satisfy your debt.
At iMoney, we believe that the best way to avoid these consequences is: to pay your credit card bills on time!
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