What Can Happen When You Don't Pay Your Credit Card Debt?

Credit Card Debts are referred to as unsecured debt. What this means is that they are not secured against any real property. They cannot repossess your car, your house or other assets as they do not have a lean on these properties. This is the very reason why credit card companies generally offer credit at interest rates that are substantially higher than mortgages or car loans. What these credit card companies can do is damage your credit report. This will dissuade other lenders in the future from either lending you money or extend credit at a higher rate of interest. There are certain cases in which a credit card company may resort to a court procedure by way of which they can put a freeze on your bank account, but they rarely do so, preferring to make a settlement by which you can pay back part of the amount as final settlement.

Add Comment

Report

A credit card is technically an invitation to use the credit line of some one and normally it's the bank who offer that credit line. In simple words, banks offered money to use for your daily household buying and purchase and your liability is to pay at a certain due date back to the bank to avail the same credit line for the next time period. Everywhere in the world, banks offer credit lines and some items require interest on actual buying and some not. For example: daily l groceries and general merchandise does not have interest so the user has to pay the actual amount to bank but for some items like electronic and gold, the user has to pay a certain amount of interest with the original amount back to the bank. This is the working of credit card and now if some one does not pay the due amount back in full, banks will not push you to do so as they will ask you to pay only a small portion of the due amount and balance payment in installments with interest. In the same way, a user will use his credit card in the next time period and is also liable for previous instalments with interest. It's a vicious circle of debt and in a hidden way, the bank got you trapped in a debt circle and the user will never get rid of that circle. The bank will receive the actual consumed amount soon from your instalments but the user will pay the interest for his entire life as interest will be added and increased every time payment is due.

Add Comment

View Comments [1]

Report