What is Credit Card Debt?

Credit card debt is an unsecured debt. It has different terms that you and your creditors need to follow. Credit cards come with credit limits or the maximum amount of money that your creditor will allow you to take. With credit card debt, a borrower can open several accounts that are supervised by the credit bureaus. Therefore, you can easily use credit cards regularly and stay out of debt if you pay off the amount on time.

Sometimes, short term loans make sense for credit card debt. So, if you stretch the time period, you might have to pay extra which would completely be a bad deal. So before you take any credit card debt, you have to pay attention. If you do not pay the money on time then you might have to face bad consequences that can worsen the situation.

Definition of Credit Cards

A credit card is a plastic card through which one can purchase his favorite items without cash. This card allows you to pay later. Therefore, when you purchase any item, this card is being used to charge the money for the account of the salesperson.

Credit card companies provide you this card on a promise that you will pay the amount back that you owed from them. All credit cards have a unique number that is attached to an account. The debt amount that you take on behalf of this credit card is called credit card debt. Moreover, you have to pay off this debt within a certain amount of time else you have to pay the extra money, called interest.

Actions Needed When You Can’t Repay Your Credit Card Bills:

Consumer Credit Act or CCA formed the law of credit card debt. It means if you are unable to pay your credit card bills, your creditors can take strict actions against you. That is why you should use your credit cards carefully. If you use them carelessly then it will be difficult as well as expensive for you to borrow them. It is the primary reason that you have to maintain proper balance.

Need Help for Credit Card Debt?

If you are looking for help for your credit card debt then get in touch with us and get our free online debt advice service.

Frequently asked Questions

  1. If you can not pay your credit card bills then your account will go into arrears and if this happens then you might have to face the below-mentioned situations.

  2. You can be asked to make up your missing payments.

  3. If you are unable to make up your payments then your account will be a default.

  4. If you still can not repay then strict actions will be taken against you.

  • First, you need to check your finances. It will then give you an idea of how much you have to pay for each month. Make a list of your income and expenses and follow a strict and proper monthly plan.

  • Use your savings to repay your credit card debts. Moreover, you can also make a separate account so that you can use it for emergency purposes.

  • Do not use your credit card until you repay the full amount. If the amount will increase then it will be difficult for you to pay off the debt.

  • Ensure you pay off all your bills including council tax or others that you might have to pay penalties.

  • If you have doubts about the debt repaying process then get our free debt help. Our experts will guide you with your budget, provide you advice and effective solutions and set up a repayment plan.

This is a common question that most people ask about. So, if you do not pay off your debt then there could be a risk of imprisonment. Although this could happen in rare scenarios. Mostly it happens for criminal fines and government debts when all the process of debt collection failed.

Generally, for credit card debts, you will not be sentenced to jail. So, if you get any such threat from your creditor then you could make a complaint against him.

If you missed your payments and unable to repay then better you consult with your credit card provider. Explain your situation in detail and get a suitable solution for you. Sometimes your creditor might consider your payments affordable for you so that you can be back on track. But this can be done for a few months.

In this situation, a debt management plan can be a good option. This process allows you to pay affordable monthly payments. Therefore, make a proper budget plan and then hand over your savings to your creditors. There is another option called full and final settlement. So, if your creditor agrees with this deal then you need to pay less than the total amount.

For getting a loan, your credit score should be good. Your creditor tracks your credit card information and shares it with the credit reference agencies. That is why you need to be careful while you use your credit card. So, if your credit score is bad then it might be difficult for you to get a loan.

All the information like your payment history, the balance that you have owed or if your account has defaulted are recorded in the credit files. Your creditor’s main job is to provide all this information to the credit file companies along with some extra information like your credit limit, your spendings of every month, the money that you have withdrawn from our bank account, etc.

Joint Credit Card Debt

As per law, a credit card account can be opened in one name, not as a joint credit card. But your credit card provider might allow you if you want another credit card for your partner or family members to use. Although you will be chargeable for both the cards, not the second cardholder. So before you take two credit card debt, check whether you are capable of it or not.

Minimum Payments for Credit Cards

Every month you have to pay a minimum amount for your credit card debts. This percentage might vary from 1%-3% of the amount you owe (usually £5).

When the amount of interest crosses over the actual credit card balance for 18th months or longer then it is called “persistent debt.”

So, if you have a persistent debt then you might be asked to increase your monthly payment by your credit card company. Sometimes your credit card company may also help you from getting out of your persistent debt. So, if you have a proper budget planning then you can easily pay off your credit card debt at an affordable rate.

To control your repayments, take help from our 60-second repayment checker.

Credit card limits

Sometimes people use a credit card with bad credit history and high-interest rates. But if you pay off your monthly payments on time, you can easily increase your credit rating. Compared to other cards, the credit card limit is affordable and provides you a long time to pay back.

If you have a good payment history then your card provider can ask you to increase your credit limit. Before you agree, check whether it is required or not. The higher limit is a kind of temptation offered by your creditors which sometimes becomes difficult to pay back.

Credit Card Interest

Credit card interest can be from less than 10% to 70% or more than that. Moreover, it depends on the type of card you are using. Credit card companies provide you a credit card based on your credit rating.

Even you might get a free-interest period for 60 days on purchase. It means if you can repay the amount within 60 days of your purchase then you do not need to pay any interest. But all card providers will not give you this facility. Sometimes you have to pay the interest straightaway on your purchase. Even you may have to provide late payment charges ( no more than £12) on top of the interest if you miss any payments.

Process of Transferring Credit Card Balance

Some credit cards will allow you to transfer the balance to another card. Most people prefer to transfer the balance from a high-interest credit card to a low or 0% interest card as it makes payments easier and faster.

But if you do not have a good credit rating, you would not get a low or 0% interest credit card. Even some time you can be charged 2-3% of the amount that you are transferring by your credit card providers. They charge this amount as a fee which will be worthless for you. So always pay attention to the fees before transferring a balance.

In case you are transferring a balance then surrender the old credit card and close the account. Otherwise, you will use both the cards and have to pay off for two debts.

Credit Card Advice

To get free and confidential debt advice, use our online debt advice tool. Our expert team will provide you suitable solutions and personalized recommendations.

So, reach out to us and get an opportunity to speak with our friendly advisors. Ensure before you call, gather all the information in our budget form to get a quick response. Within 40 minutes you would get effective suggestions from our debt experts. So, for any queries feel free to call us at 0800 046 5868 and our support team will be available for you.

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