What Happens if I can’t Pay My Credit Cards?

Many South Africans face financial difficulties, forcing them to miss credit card payments. You are probably here because you are faced with this prospect. With so many bills needing to be paid, it can be tempting to put payment of your credit card bills on the backburner. However, missing credit card payments can have serious consequences. In this article, we’ll explore what happens when you can’t pay your credit cards and provide guidance on managing your debt.

Consequences of Missed Payments

• You will be charged a late payment: Your credit card company will charge you late fees, increasing your balance. That can make things even more difficult for you financially. If you think deferring payment of your credit card debt is the solution, the truth is that you will only be miring yourself more and more in debt.
• Negative Impact on your Credit Score Impact: Missed payments will be reported to credit bureaus, damaging your credit score. Again, this is something that you will want to avoid at all cost. A negative credit score makes it difficult for you to get loans in the future.
• You APR Will Increase: Your creditor can increase your APR, making it harder to pay off your balance. APR stands for Annual Percentage Rate. In simple terms, it’s the annual cost of borrowing for you as an individual. Having it increase means you will need to pay way more when you borrow.
• Debt Collection: Your account may be sent to a debt collector, leading to persistent calls and letters. If you have ever had to deal with this, you will know that it is something that you will want to avoid at all costs.
• Legal Action: In extreme cases, your creditor can sue you, potentially leading to wage garnishment or property liens.

Managing Your Debt

That’s the answer to the question “what happens if I can’t pay my credit cards?” The consequences can be rather dire. One thing that we need to note here is that a lot of South Africans get into trouble because they treat credit cards as a source of free money.

That couldn’t be further from the truth. As is the case with everything else in life, whatever you borrow will need to be paid back in one way or the other. The good news is that there are steps that you can take to reduce the impact in the event that you are struggling to pay your credit card debts;

• Contact Your Creditor: Reach out to your credit card company to discuss possible solutions, such as a hardship program or temporary reduction in payments. Don’t try to avoid responsibility. You creditor knows that people can fall on hard times for one reason or the other. They will be very happy to working with you on a more affordable payment plan.
• Seek Professional Help: Non-profit credit counseling agencies, like the National Credit Regulator (NCR) or the Credit Ombud, can help you develop a plan to manage your debt.
• Prioritize Your Debts: Focus on paying essential bills and debts with collateral (like mortgages or car loans) first. Try by all means to reduce your spending in other areas. Your debts take a priority. If you have to move to a cheaper location, then do so. If you have to cut out on some luxuries do so.
• Consider Consolidation: Look into debt consolidation options, like balance transfer cards or personal loans, to simplify your payments and potentially save on interest.

South African Credit Card Debt Statistics

So, why are we here? The fact of the matter is that South Africa’s credit card statistics can be rather frightening;

• 40% of credit card holders struggle to make payments (Source: NCR)
• R135 billion in outstanding credit card debt (Source: Reserve Bank)
• 25% of credit card holders have multiple credit cards (Source: Credit Ombud)

Conclusion

In the above article, we tried to answer the question “what happens if I can’t pay my credit cards?” It was noted that missing credit card payments can have severe consequences, but there are ways to manage your debt and avoid these outcomes. By understanding the consequences and taking proactive steps, you can regain control of your finances. Remember to communicate with your creditor, seek professional help if needed, and prioritize your debts. Take the first step towards financial freedom today.

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