Common Credit Card Restructuring Questions Answered

People know there is something called credit card restructuring, but unfortunately, they don’t use this service offered by financial institutions due to their lack of knowledge. They don’t know what this service is all about, how it works, and others. And thus, they don’t get the benefits and suffer from many credit card problems.

To avoid any, we will answer some common credit card restructuring questions in this post. 

What Is Credit Card Restructuring?

The economic fallout due to the COVID-19 pandemic led to significant financial stress for customers. This is where credit card restructuring helped people and is helping them.

The literal meaning of the term “restructuring” is making changes in the existing structure to give it a better look or make things better for all. Similarly, credit card restructuring means making changes in the existing functioning of credit cards to make repayment easy.

In credit card restructuring, the bank or the financial institution converts the credit card dues to a term loan with equated monthly installments (EMI) with a reduced rate of interest. When you opt for the credit card restructuring service, the credit facility on the credit card withdraws.

Who Is Eligible For Credit Card Restructuring?

Everyone is not eligible for credit card restructuring. Generally, the customers whose card accounts and other loan accounts are in good condition with the bank are eligible for credit card restructuring. This ensures the bank that the customer isn’t financially broken completely and there is a high chance of recovery. It’s just the condition that has prevented the customer to pay the credit card dues.

Other than this, the application for the credit card restructuring is subject to internal assessment, based on the bank’s policies and procedures.

What Are The Terms And Conditions Of Credit Card Restructuring?

  • If you fail to adhere to the stipulated payment plan, the restructuring plan may be revoked.
  • After the acceptance of the credit card restructuring plan, the credit card facility extended on the credit card will be withdrawn. The credit card could be re-issued with a suitable limit depending on the timely repayment of dues as outlined in the restructuring plan.
  • You will be liable to pay a late payment fee, interest, etc if charged on your credit card account in the interim period between acceptance of the request and invocation of a restructuring plan.
  • If you hold more than one card with the bank, all the cards will be reviewed for restructuring and blocked for usage on opting in for credit card restructuring service.

How Does Credit Card Reporting Happen On Opting For Restructuring?

It’s very simple. In your credit card account, the “restructured” status will reflect where the resolution plan is implemented in this framework. Other than credit facility and its rules, the credit history will be governed by the respective policies of the credit information companies. They update the details as applicable to accounts that are restructured.

What Will Happen If You Cannot Pay As Per The Agreed EMI Schedule?

The credit card restructuring plan will get revoked upon non-payment and you will not be eligible to reapply for any further restructuring plan.

Credit card restructuring is for your benefit. So, you should gain as much information as possible and use the service undoubtedly.

 

Problems for a Credit Card Defaulter

A credit card is for your help. With this, you can buy today and pay later to the credit card company. It means even if you don’t have money, you can get things of your choice easily and conveniently, keeping yourself away from the financial crisis.

A credit card gives money but for the time being. You should pay the spent amount later, within a certain period. If you don’t pay the amount, you will become a credit card defaulter. You can avoid this even by paying the minimum amount due at the right time. Every time you fail to pay the amount, the bank adds a penalty increasing the overall credit amount. If the same continues for 6 months or more, you will be termed as a defaulter.

Many people think that the defaulter tag is for a short-term. The bank will remove it once the payment is complete. Thus, people take it lightly and take time to collect cash and pay it to the bank. But, truly speaking, the tag of a credit card defaulter comes with lots of consequences.

Consequences Of Becoming A Credit Card Defaulter 

  • Negatively Impacts On Credit Score 

Missing out on credit card payments, intentionally or unintentionally, leads to a negative impact on credit score. And when the credit score is low, its major benefits get canceled out, and chances of getting a new credit get minimized. This can only be done by using your credit card effectively and paying the bill on time.

  • Blocking Of Credit Card Account

A credit card company considers this condition for a maximum of 6 months. After this, it terms the cardholder as a defaulter. To avoid any risk to the bank, you will be blacklisted. The bank will block your credit card account and you will have no option for credit purchase.

  • Taking Legal Actions

Not paying your credit card bills is considered fraud. No matter what the reason is for not paying the bills, you will be considered wrong in the eyes of law. In this situation, the bank might take legal action against you. Due to this, you will neither get the benefits of a credit card nor will you get a credit card from anybody in the future.

  • Increasing Interest Rates

If you don’t pay your credit card bills for more than 60 days, the credit card company will increase your interest rate. Sometimes, the company increases the interest rate as high as 30% of the credit card overdue. If you don’t pay the amount soon, the interest rate on your credit card will become more than your actual credit card bill.

Increasing Interest In The Outstanding Balance 

Paying only the minimum amount due out of your total credit card bill before the due date is just a way to inform the credit card company that you are active and will pay the bills. But, this action is not long-term. The credit card company might increase the interest rate on the outstanding balance when you are ready to pay. So, it’s good to pay your credit card overdue in full.

Opt For A Credit Card Settlement Service 

If the outstanding balance on your credit card has increased and you cannot pay it together, you should opt for credit card settlement. In this, the lender (credit card company) agrees to forgive a portion of your debt in exchange for a promise from you to pay the remainder. But, it depends on the factors such as your income, how much you can afford to pay, and the amount you owe.

In some unusual conditions, the lenders contemplate rescuing at least a part of their money rather than letting it all go to bad debt. Credit card settlement is not easy. So, you should seek help from a reputable debt settlement company for the same.

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