What Happens To Unpaid Credit Card Debt In The Philippines?

The benefits of using a credit card are numerous, but it can be frightening to let your spending go out of control and rack up debt. Give yourself some time to reflect on the situation so that you can better prepare to face the repercussions and pay your debt. Still, what happens to unpaid credit card debt in the Philippines? The answer is in this post.

What Happens To Unpaid Credit Card Debt In The Philippines?

High Interest Rates

A high interest rate is the first thing customers who have recently started skipping payments can anticipate. If your balance is too big, paying only the minimum won’t be sufficient. Plus, the bank may also add penalty costs on top of the interest rate rise.

Account Suspension

The bank can suspend or close your account if, after three months, you are still unable to pay the minimum amount required according to your credit card requirements.

Even worse, your name may be included in the negative dossier accessible to other institutions. Moreover, the suspension of your credit card will make it more difficult for you to be accepted for reapplication or application for other sorts of loans.

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Damage Your Credit Score

Missing payments, having your account stopped, and getting a demand letter are the things that will lower your credit score. Since your credit score demonstrates your level of fiscal responsibility, it won’t be simple to apply for loans and credit cards. The bank will find it difficult to trust you when your standing is bad.

Legal Action

The bank may bring a legal lawsuit against you should you continue to miss payments after getting the demand letter/notice. After the bank files a case, a collections company will take control of your debt and be in charge of collecting the money. The debt collector may issue you a court summons if you don’t pay off your debts or settle them.

What Can You Do With Your Unpaid Credit Card Debt?

Notify Your Bank

Even in a precarious financial circumstance, alerting your bank that you’re going to miss a payment demonstrates your proactivity and responsibility. Some creditors may offer interest-only repayment options to allow you more time to sort things out.

Pay The Required Minimum

Even the very minimal payment is preferable to not making any payment at all. Generally speaking, paying more than the required minimum is advisable to lower your outstanding balance. However, if you have a month where money is tight, ensure to at least pay the required minimum and try to pay more the next month.

Take Balance Transfers Into Account

This approach entails seeking assistance from a different credit card company. Balance transfers involve shifting debt from one credit card to another or to a different credit card issuer in exchange for a reduced interest rate. Additionally, it will assist you in avoiding other costly costs while you pay off the loan.

Keep in mind that transferring the balance to a new card is possible, but only if your new bank agrees to assume responsibility for your debt with your current card’s original issuer.

Negotiate Your Debt

Suppose you will not be able to pay the whole amount owing at this time; you may contact your credit card company to discuss renegotiating your debt.

Proof to your bank that you can pay off the debt over a longer period using installments (a more reasonable payment plan). Most likely, the bank can comply with the request rather than having one of its clients fail to make good on their obligation.

How Do You Pay For Credit Cards In The Philippines?

Over-The-Counter Payment

The conventional method of paying your credit card bills is to visit the physical bank and settle the bills there. Depending on your bank, you may also be able to make over-the-counter payments at shopping centers and retail locations using: TrueMoney, Bayad Center, SM Bills Payment Counters, Robinsons Business Center, and Cebuana Lhuillier.

Online Banking

Most credit cards today include digital features that help streamline transactions. The majority of banks have online platforms where you can sign up for your deposit account and conduct transactions whenever and wherever you like. Use a mobile device or computer, go into your online banking account, and pay the bills.

ADA (Auto-Debit Arrangement)

ADA enables the bank to automatically deduct card payments you’re your designated Checking Account or Security Bank Savings. As long as your bank account has enough money, you can enroll in an ADA that will automatically withdraw money from it to pay the credit card payments.

ATM

ATM credit card payments are identical to other transactions. You may use the ATMs of your card provider, its partners, or member banks of Megalink or BancNet. Notice that different banks may have different policies regarding how to pay using an ATM card.

E-Wallet

You can keep your money online using e-wallets, commonly referred to as mobile wallets or virtual wallets. Applications like Coins.ph or GCash also enable you to pay for the credit payments directly.

Frequently Asked Questions

Does Paying Off A Credit Card Improve Your Credit Rating?

As your credit usage ratio decreases, paying off the credit balances is advantageous for your credit ratings. Your credit scores can decline if you close your accounts as you settle them. Once cards are closed, scores typically start to rise again after a few months.

How Long Does It Take In The Philippines For Credit Card Debt To Be Written?

There is a misconception that outstanding credit card debts vanish after seven years. Still, records of unpaid credit card debts won’t vanish or be erased in the Philippines. You’re still responsible for paying these obligations to your credit card companies, no matter how much time has gone.

How Can I Obtain A Full Payment Certificate For My Debt?

Once you have paid off your debt, you can ask your bank or its approved debt collecting agency for the full payment certificate. You must submit a deposit slip and sign a clearing form acknowledging receipt. Keep a soft copy of this certificate of clearance on hand in case your credit report is not updated as required.

Conclusion

What happens to unpaid credit card debt in the Philippines? Now you have the answer you are looking for.

You will never know when hard circumstances will strike, and keeping up with your credit card payments during these times can be difficult. Thus, managing your money well and using additional caution while making purchases is the best way to prevent credit card debt.

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See also: How to get out of debt? 6 ways to successfully write off debt