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Category: Credit Card Settlement

What are the Consequences of Becoming a Credit Card Defaulter?

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Credit cards are a convenient way to make purchases and manage your finances, but they come with significant responsibilities. One of the most significant risks associated with credit cards is the possibility of defaulting on your debt. Defaulting on your credit card debt can have serious consequences that can impact your finances and credit score for years to come.

In this blog, we will explore the consequences of becoming a credit card defaulter and provide tips on how to avoid this situation.

 

  • Negatively Impacts the credit score

Late or missed credit card payments can harm your credit score, which negates the primary advantage of using a credit card. To enhance your credit score, you must use your credit card effectively and pay your bills promptly. Maintaining a good credit score is essential to qualify for higher loan amounts in the future. If you fail to pay your bills on time, it can have adverse effects on your financial well-being in the long run.

 

  • Credit card account gets blocked

Failing to make credit card bill payments for up to six months will result in you being labeled a credit card defaulter, leading to blacklisting from the bank and the eventual blocking of your credit card account. This could cause considerable financial distress as you may be unable to access credit or may have to rely on other less favorable means of financing.

 

  • Leads to legal implications

When credit card bills remain unpaid for an extended period, it may suggest to banks that you are engaging in fraudulent activities. This can have serious legal consequences, as banks may pursue legal action against you to recover the unpaid amount. This can impact your financial stability and limit your ability to access credit when you need it.

 

  • High-interest rate is charged

If you fail to make credit card bill payments for more than 60 days, credit card companies may charge interest rates of up to 30% on the overdue amount. This interest rate is also applicable to new purchases made using a credit card. If this pattern persists, the interest on your credit card bill can quickly exceed the actual bill amount, leading to an increasingly precarious financial situation.

 

  • Interest is applied on outstanding balance 

Despite a common belief among credit card users, paying only the minimum amount due on your credit card bill before the due date does not exempt you from paying interest charges. In fact, interest charges are levied on the outstanding amount starting from the due date, regardless of the minimum amount paid. Therefore, it is essential to pay the full credit card bill amount to avoid incurring interest charges.

How Loan Restructuring for Credit Card can prevent you from becoming a Credit Card Defaulter?

Loan restructuring is a process where you work with your credit card issuer to change the terms of your debt to make it more manageable. It typically involves negotiating a new repayment plan that includes lower interest rates, reduced fees, and more extended repayment periods. Loan restructuring can help you avoid defaulting on your credit card debt by making it easier for you to keep up with your payments and reduce your outstanding balance over time.

When you enter into an agreement for loan restructuring for a credit card, you will likely have to agree to certain terms and conditions, such as making all of your payments on time and not using your credit card for new purchases. It’s important to read and understand these terms before agreeing to them so that you know what is expected of you

If you want to know more about credit card loan restructuring, contact Lin International Debt Management.

 

A Complete Guide to Credit Card Settlement Plans in the UAE

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Residents of the UAE who are having trouble paying off their credit card debt are increasingly turning to credit card settlement plans. These plans provide borrowers with a structured repayment alternative intended to make it simpler for them to manage their bills and eventually become debt-free.

A credit card settlement plan in the UAE is a settlement made between a borrower and a lender that enables the borrower to pay back their unpaid credit card debt in installments. The borrower must still pay back the total amount of the debt, even though the lender may waive some fees and interest charges.

These plans provide debtors with a more manageable repayment choice to assist those who are having financial difficulties making their credit card payments.

This blog will provide you with a thorough overview of credit card settlement plans in the UAE.

What is the Process of a Credit Card Settlement Plan?

Borrowers are often expected to pay a lump sum upfront when enrolling in a credit card settlement plan. Often, this payment represents a portion of the entire sum due. After making the one-time lump sum payment, the borrower will start paying the balance of the debt in regular monthly payments. Depending on the conditions of the agreement and the borrower’s financial situation, the repayment period may change.

Aspects to Consider Before Enrolling in a Credit Card Settlement Plan

The following are the aspects you should consider before enrolling in a credit card settlement plan in UAE.

  • Conditions of the agreement

Before enrolling in a credit card settlement plan, borrowers should carefully read the conditions of the agreement. This contains the timeframe for repayment, the interest rate, and any other fees set by the plan.

  • Affordability

Before agreeing to a credit card settlement plan, borrowers should be sure they can afford the monthly payments that are involved with it.

  • Effect on Credit Score

Even though credit card settlement plans have the potential to boost a borrower’s credit score over time but there may be a temporary negative effect on it.

  • Alternatives

Before enrolling in a credit card settlement plan, debtors should consider alternative possibilities such as balance transfers and debt consolidation loans.

Advantages of Credit Card Settlement Plans

The following are the main benefits of credit card settlement plans:

Reduced interest rates:

Compared to standard credit card debt, credit card settlement plans often have lower interest rates. This may enable borrowers to reduce their overall interest charges during the payback time.

Fixed Repayment Schedule:

Credit card settlement plans offer borrowers a fixed repayment schedule, which can help them better manage their debts and eventually become debt-free.

Credit Card Score Improvement

A borrower’s credit score can be raised over time by paying off credit card debt through a settlement plan.

Fee Deduction

In some circumstances, lenders may waive some fees related to credit card debt, such as late payment fees and over-limit fees.

Stress Reduction

For many people, credit card debt can be a major source of stress. Credit card settlement plans can help by giving borrowers a clear path to debt repayment, which can reduce this stress.

Conclusion

Borrowers who are struggling to pay off their credit card debts can find a credit card settlement plan in the UAE to be a valuable tool. These plans provide a structured repayment option, reduced interest rates, and the chance of fee waivers. However, before signing the agreement, borrowers should thoroughly review its conditions.

Credit Card Debt: How We Fall into the Trap & How to Get Out

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Many people in the UAE fall into the credit card debt trap without even realizing it until they are buried in debt that they can’t get out of without filing bankruptcy. This can be due to job loss, medical expenses, or just having bad spending habits.

Whatever your reason may be, if you’re looking to get out of credit card debt and wondering why you fell into the trap in the first place, this guide will give you the answers you need and tips on how to prevent yourself from going there again in the future.

Not Repaying The Entire Credit Card Bill

One of the most common reasons people fall into a credit card debt trap is by not repaying their entire credit card bill each month. When they do this, they are just allowing themselves more and more credit on their cards.

And when they finally can’t keep up with it anymore, it’s too late because they’re already in debt. It’s important to always make sure you’re paying off your credit cards every month so that you don’t end up in debt.

Don’t Spend Money On Things That Aren’t Necessary

The most common reasons for getting into credit card debt are overspending and getting caught up in lifestyle inflation which is too common in the UAE. Once you’re in a hole, it can be difficult to get out, but there are ways.

If you find yourself constantly spending money on things that aren’t necessary, it’s time to reevaluate your spending habits and find more frugal ways of living. Start by giving yourself a budget and sticking with it as best as possible.

Pay Off Those High-Interest Cards First

One of the best ways to get out of credit card debt is by paying off your cards with higher interest rates first. It may be tempting, but it’s not a good idea to pay off low-interest cards with high balances before higher-interest ones.

You should start with the highest balance and work your way down to lower balances. You’ll end up saving money in the long run and making progress faster on eliminating debt.

How To Get Out Of Credit Card Debt?

If you have fallen into the trap of credit card debt, here are some tips on how to break free from the cycle so that you can start living life on your own terms again.

Credit Card Balance Transfer

Credit card balance transfers are a great way to get out of credit card debt by transferring your high-interest credit card debt onto a low-interest credit. In exchange for lower interest rates, you’ll have to pay higher transfer fees. Make sure you do the math and see if this is the best option for you before signing up.

Credit Card Settlement Plan

It can be difficult to settle down your credit card debt. The best way to get out of credit card debt is by contacting professionals who specialize in credit card settlement plan in the UAE.

These companies are set up specifically for this type of situation, and they can help negotiate settlements with your creditors on your behalf. They will also make sure that you’re never making payments more than what you can afford.

Conclusion

By taking a few simple steps, you should be able to eliminate or at least minimize your debt with a credit card settlement plan. You never want to fall too far behind on these payments, as the consequences can be disastrous if you allow the interest and fees to pile up – but with a little diligence, you’ll be well on your way to making your debt a thing of the past.

Common Credit Card Restructuring Questions Answered

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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 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 it  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, it means making changes in the existing functioning of credit cards to make repayment easy.

In  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 restructuring service, the credit facility on the credit card withdraws.

Who Is Eligible For Credit Card Restructuring?

Everyone is not eligible for it. Generally, the customers whose card accounts and other loan accounts are in good condition with the bank are eligible for 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 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 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 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 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

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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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