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Some of you may be worried about using a credit card. There are numerous advantages to using a credit card. On the flip side, paying credit card bills has turned out to be troublesome for many. This is a result of poor planning on repayment. Or, there may be an unexpected emergency situation that has eaten into your savings leaving no room to pay your bills.
What to do first if you can’t able to make credit card payment?
As soon as you realise that you are unable to make the credit card payment this month, call the bank or card issuer and let them know you wouldn’t be able to make the payment this month. If possible, state a date on when you could be able to pay. If it’s the first time missing the payment, convey it to the staff. It may work as some kind of an assurance if you have maintained a good payment history.
Also, you can try requesting them to change the due date for payment. This can help in reducing the late payment fee and also save your credit score from taking too much damage. In addition, request the staff to waive off the late payment fees. This can save a considerable amount for you when your pockets are empty.
Tiered Interest Rates and Late Payment:
- BNM levies three different interest rates based on your repayment habits. The first type of interest rate (usually 15% p.a. ) is applicable for individuals who have never skipped the payment. The second category (usually 17% p.a. ) is for those who promptly pay at least 10 months in a 12-month cycle. The last category is for those who frequently miss out payments with the highest rate (usually 18% p.a. ).
- Try not to fall into the last category where you end up paying high finance rate. Also, in this case, you will be paying late payment fee that is equivalent to 1% p.a. of your outstanding balance calculated on a daily basis until you fully repay the balance.
Payment Missed the First Time:
It is obvious to miss to pay the bills sometimes due to various reasons. You will then get a call from the credit card company/bank to remind you of the missed payment. You are required to pay at least the minimum payment along with a late payment fee. In addition, this will be recorded in your credit history.
Payment Missed the Second Time:
- If you fail to pay by the second month’s due date, the bank will send you written reminders and make calls. Now, the total amount you have to pay is, the outstanding balance + (the first month’s interest + late payment fee) + (the second month’s interest + late payment fee)
- The bank specifies a minimum amount; when you pay this amount, the red flag will be removed from your account. By now, your card will be blocked to ensure that you will not make further purchases with the card. Your credit history will contain information about the missed payment.
- One of the ways to resolve this situation is to request the bank to convert the outstanding balance into a loan so that you can afford to repay.
Payment Missed the Third Time:
- If the bank does not accept your proposal of converting the debt to a loan or if you take the payments very lightly and still miss the payments, you will lose access to your card until you pay the agreed sum.
- If you further ignore it, then your account will be moved to the supervision of the collection centre. The collection centre sends a legal notice asking you to repay the whole amount you owe to the bank till date including the expenses incurred to send the legal notice.
- If you wish to settle the matter but unable to pay the money you owe, you can enlist the help of a debt management agency.
Payment Missed Further:
The bank now transfers the recovery charge to a third-party agency. The agency is supposed to recover the money from you within a specified deadline. Be informed that the recovery agency has no right to physically harm or threaten you in order to settle the deal.
The Final Step:
When none of the bank’s strategies worked well, the bank will go ahead with legal procedures and issue a court summon. This will be reflected in your credit history instantly and you will lose all the chances of getting a loan from any other bank. The next thing you can do is to liquidate any asset you have and declare bankruptcy if the amount you owe is RM30,000 or more. Your Passport will be blocked and you cannot leave the country. You may lose your job as well.
It is highly recommended not to neglect the credit card bill payments and let the bank take the issue to the court of law. As soon as you realise that you are unable to pay the balance, find a way to inform the bank about your situation and strike a deal with the bank based on your financial state. Also, spend with your card only if you will be able to make the required payments on time.