5 Smart Things To Do If You’re Falling Behind On Credit Card Bills
The worst thing to do is just ignore it!
Unable to pay off your credit card bills, or barely making the minimum payment? You’re not alone. While the number of Malaysians declared bankrupt due to credit card usage remains low, according to an NST report, a lot of us are struggling to pay our credit card balance.
For those who are currently falling behind on their credit card payment, you might want to start taking actions to achieve a good credit score. However, don’t go cancelling your credit card just yet, as something good is on the cards if you make the effort to pay them off.
The Sun recently reported that in Malaysia, a better credit score could be used as a bargaining chip to negotiate with banks for lower interest rates, be it for a mortgage, a car loan, or even credit cards.
“There are cases where credit card holders have successfully negotiated for a lower annual interest rate of 15% from the average rate of 18% due to their better credit scores,” said RAM Credit Information Sdn Bhd (RAMCI) Chief Executive Officer Dawn Lai in the report.
Start taking actions immediately to maintain a good credit score, and eventually work on getting lower interest rates for your credit card.
These are the 5 smart things you can do now if you’re falling behind on credit card bills.
1. Contact your credit card issuer
You can never rule out a difficult financial situation arising out of a sudden event, such as being hit with unexpected medical bills or being laid off. Whatever you’re dealing with, your best bet is to contact your credit card issuer and let them know about your circumstances, especially when you’re running out of time to come up with the money to make the payment.
If you’ve missed a payment, assure them that it’s only a one-time thing and that you’re now working on paying your debts. Have a clear plan in mind so you can provide some details to your creditor. However, avoid making any promise you’re unable to keep. These are some of the things you can explain to your creditor:
- Why you are unable to pay the minimum or missed a payment
- How much you can afford to pay at the moment
- What kind of assistance are you looking for, and for how long
- When you are able to resume the normal payments
If you’re lucky, your creditor might waive the late fee, extend your due date, or do other things they see fit. In the case where your card issuer is unsympathetic to your situation, you can consider getting a small advance from your employer or borrow some money from a close family member or friend.
2. Forgo unnecessary expenses
Start reviewing your monthly expenses and try to track literally every sen that leaves your wallet or bank account, and look for ways to cut down costs. Find out if there’s anything that can be eliminated or reduced. For example, can you find a cheaper broadband plan? Can you get lower rates on your insurance? Will you be able to carpool, bring your own meal to work, or cancel your cable TV subscription?
Be willing to forgo unnecessary things for a while until you’re able to make your credit card payments. Whatever it is, never put off your utility bill payments to avoid disconnected services, which will make your life even more difficult.
3. Start making extra money
Desperate times or not, it’s always nice to have some extra money in hand. Do you have any skill or service that you can leverage on? Utilise it, either by providing your skill or service on freelancing platforms or finding the right short-term jobs that you can do in your free time.
Create an online course, start a drop shipping business, host people for dinner; there are lots of ideas out there that you can try as a side hustle to bring in extra cash.
4. Make up for a missed payment immediately
To avoid your debt from piling up, be sure to make up for your missed payment before the next due date comes, as soon as possible. This way, your credit score will be safe, although you’re still likely to be slapped with a late fee.
Other small things to do before the next payment is due include:
- Setting aside a budget for credit card bills – If you haven’t done so, include your credit card payments into your monthly budget.
- Automating your payments – This will ensure that you’ll never miss out on your credit card payments. Most banks provide the options of paying the minimum amount, a fixed amount, or the full amount owed.
- Setting up a monthly reminder – Use financial apps that allow you to set up a monthly reminder for your credit card payments. You can also go old school by writing the due date on your calendar. If you can, make the payments a few days before the due date to ensure the payment goes through just in time.
5. Get (free!) professional help
If you’re too deep in financial distress, seek help from a non-profit credit counselling organisation. They’re typically government-linked, and they usually offer free financial education, financial counselling, or debt management programmes (just to be safe, always ask if you will be charged before you sign up for any programme).
We suggest you pay a visit to The Credit Counselling and Debt Management Agency (AKPK). The agency provides various services, including a debt management programme (DMP), completely free of charge. For the DMP, their counsellors will work with you to develop a personalised debt repayment plan in consultation with your financial service providers.
You may also consider going for a personal loan which is regarded as a useful tool to consolidate high-interest debt like snowballing credit card dues. That said, a personal loan still needs to be repaid in full on time with the interest, so ensure you’ve got a proper plan in place to clear it all before signing up for one.
Written by Dayana Sobri on behalf of BBazaar Malaysia.
BankBazaar.my is a leading online marketplace in Malaysia that helps consumers compare and apply for a credit card, personal loan, home loan, car loan and insurance.
Better late than never – start taking steps to work on that debt NOW! If these 5 tips to manage credit card debt were helpful to you, leave a comment or share with a friend who might need help!
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