Responsibility is key when you use a credit card regularly. Paying your bills on time is one of the most important things you have to do to make sure you are not ruining your chances of a new credit card in the future.
Read on to know the 7 damaging effects of not paying your credit card bills on time…
If you fail to pay back the debt of the bank on time, the bank employs debt collectors who will call you all day and hound your office day and night in hopes of soliciting you to pay the bills. They will keep contacting you and try their best to persuade you politely or roughly. It is always a good idea to reach an agreement with the bank to get the debt collectors off your back
Deposits of your security cheques:
During the application of your credit card, you are asked to submit a blank cheque to the bank. The bank is at liberty to use this opportunity to withdraw the amount outstanding to the bank from the blank cheque issued to them. This is totally within the liberty of the bank and will be used if you fail to deposit or clear your outstanding dues even after continuous persuasions
If the cheque that you have issued to the bank bounces, a police case will be filed against you. Check bounce is a civil offence and you won’t be arrested, but you will have to pay a large fine to get out of it
The police get involved:
Outstanding dues that have not been paid for a very long time are under the supervision of the police as well. Police and immigration systems will often hound you to pay the money back and employ various legal methods to ensure that you clear outstanding dues. If you leave the country with outstanding debt on your credit card, you are not safe either. Local debt collectors and people from the bank approach you in foreign nations as well to persuade and solicit the clearing of outstanding debt to the bank. The bank will stop at nothing to get its money back, so it is generally a good policy to pay on time
Damaged Credit score :
Your credit score is highly dependent on your ability and history to pay back your payments. If you have outstanding credit card debt, your credit score gets impacted a little. However, if the outstanding debt does not get cleared for a long time, your credit score will fall very very rapidly. This fall will affect your ability to procure any loan, new credit cards or any other lines of credit from a bank or financial institution in the future
Future loan Applications:
If your credit score gets hampered by your outstanding debt, banks and financial institutions will hesitate from giving you a loan. A low credit score indicates that you have a history of not paying back your debt. So, no bank will readily give you a loan. This might hamper your future financial prospects if you ever try to get a mortgage for a house or a car loan or likewise
If you fail to pay your credit card bill for a very long time, the interest keeps adding up nevertheless. The compound interest, along with penalties and charges that keep adding to the principal amount will end up being a lot more than what you actually spent. To avoid this, pay your bills on time.
What happens if credit card bill is not paid on time?
If you don't pay your credit card bills on time you would be levied with late payment charges, increased interest rates and incur damages to your credit score. In case you continue to miss your payments for so long, your card can be frozen and your debt could be sold to a collection agency
How long can you go without paying a credit card bill?
A credit card payment is generally considered late when it's 30 days past due and won't end up on your credit report until that point,
Can you go to jail for not paying your credit card bills?Can you go to jail for not paying your credit card bills?
You can't go to jail for nonpayment, but when your security cheque is bounced, Bank will file a police case. then you have to visit the police station.In Dubai, If the cheque amount is less than Dh200,000, the punishment may be by fine and the fine may vary between Dh2,000 and Dh10,000 depending on the cheque amount.