In this article, we share our best tips on what to do if you can no longer afford to repay your credit cards.
Personal credit cards are widely available and are a convenient way to pay your bills. They’re risky though because you’re spending money you might not actually have.
If you’re struggling to make repayments on your credit card, follow these steps.
Steps to take if you’re struggling with credit card debt
Work out what you can afford to pay
If you’re struggling to pay back money you owe, the first thing to do is to work out what you can actually afford to pay by doing a simple budget. Check here to see if you are over-indebted
If you can afford to pay something
Start paying the amount you can afford and get in touch with your creditor straight away to put a repayment agreement in place.
If you can’t afford to pay anything
Call us on 0410125036 straight away for advice or book a consultation.
Contact your credit provider
Get in touch with the creditor. Tell them you’re in a financial predicament and explain why you’re struggling to make repayments.
In most cases the creditor will help you with a repayment arrangement based on what you can afford. They may be able to:
- Stop charging you interest
- Change the payment to an amount you can afford
- Make longer term repayment arrangements
- Give you a few months of making no payments so you can get back on your feet
- Waive your debt if you are experiencing extreme hardship or have an exceptional circumstance
Be prepared before you make contact. Read about how to negotiate payment terms.
If you get a reduced repayment arrangement, it means:
- Your payments will be lower, but it will take longer to repay the debt.
- The overall cost of a loan may therefore be greater.
- You’ll still have to pay off your debt even if your lender cancels your credit card
Remember, if you’re successful in coming to an arrangement, you need to keep to that arrangement. If you can’t afford the repayments ring your lender and change the arrangement. Your lender may cancel your credit card at any time and is likely to do so if you’re behind in repayments.
Reduce your overall credit card debt
If you are spending more than you earn and using your credit card for purchases, the high interest rates and other charges means the debt can build up quickly.
Other simple things you can do are:
- Avoid using your credit card/s for any more purchases, except emergencies
- Keep up your credit card minimum repayments and pay on time
- Decide to start paying extra (more than the minimum repayment) on one of your credit cards to pay it off. Start with the smallest debt credit card or the highest interest credit card.
- Close each credit card account as you pay it off
- Lower your credit card limit
Speak to one of our debt counsellors
If your problem still hasn’t been solved, or you’re feeling overwhelmed, call us on 0410125036 to speak with one of our financial counsellors.
Also note that, If you were given a credit card limit you could not reasonably afford at the time the credit card and/or limit increase was granted, the loan may be arguably reckless or fall under reckless lending.
The credit card or balance thereof can be written off if the court finds that the credit obligation was indeed granted reckless. Contact us to investigate further.
Read more about reckless lending by downloading the National Credit Act
Credit providers must act reasonably in dealing with your issues. If you are not satisfied, you have a right to dispute or escalate the matter to the NCR or Credit Ombudsman.
Visit our Facebook Page