Credit card is a debt that one takes to simplify the lifestyle. However, one must ensure regular payments to keep your finances strong. If you are not on any discount or interest-free credit card, it is important to maintain a good record. Missing credit card payments could lead to late fees.
And if you do not pay the bill for 3-4 months consecutively, the company may charge interest costs with a late payment fee. It may affect your credit score significantly as well. A credit card company generally does not report the default until 30 days. It is an ideal time to take charge and clear the debts.
What happens after 30 days of non-repayment of credit card debt?
Once your credit card debt is due for 30 days, here is what happens next:
- The interest, late fee, and other charges may pile up
- A single late payment drops your credit score by 110 points. Many due payments may significantly impact it.
- After 60 days of non-repayment, the card provider may issue a penalty on the APR
The card issuer may inform you of the delinquency of the credit card. He may notify you with constant warnings of the consequences of the non-repayment.
Eventually, the credit agencies will send your information to debt collectors to collect the dues.
Impact of credit card debt on doorstep loan repayments
An emergency may arise regardless of the credit card default or pending payments. Here loans like provident can help you meet your needs hassle-free.
There are some situations - old age, mobility issues, or engagement, where you cannot walk from your home or office to get cash. If you get stuck in such situations, doorstep loans or provident loans can help.
In these loans, one gets cash at home regardless of credit history. You do not need a bank account even to qualify for the loan. It is ideal for short-term and critical needs for which you cannot get the cash. You can use the facility to meet urgent cash needs like- short-circuit repair, paying the vendor in cash, or medicines. If you want, you can get the payment online in your account also.
Though the doorstep loan does not mandate credit history, lenders analyse it to provide the right quote. Hefty credit card payments could impact the doorstep loan costs or the quote you receive.
Though it is a short-term loan, you must ensure regular payments. The reason is that doorstep loans have competitive interest rates. It implies the loan costs increase with every missed payment.
Managing credit card debt with doorstep may be problematic if you lack a sound income. Individuals with good incomes can pay off both without struggle. All you need to do is budget.
How to manage credit card and doorstep loan debt easily?
If you have credit card debt, it would be ideal to either consolidate it or pay it off.
Credit card debt consolidation will help you release the clocked money and improve your credit score. It would make doorstep loans affordable.
You can switch to a better loan quote for your doorstep if your credit score improves.
There are other ways to ensure responsible doorstep loan and credit card repayments:
a) Making more than minimum payments on credit card
Identify whether the credit card provider has any pre-payment charges. If not, you can pay off more than the due amount. Do so only if it does not impact your monthly budget. Alternatively, it would leave you with enough scope to pay your doorstep loan payments timely.
b) Choose a shorter doorstep loan duration
It is ideal picking a smaller duration than exceeding the term unnecessary. By doing so, you can save on interest costs and other fees. It will help clear the loan early. It is ideal if you can manage it with the existing liabilities.
c) Set up a direct debit for loans
Whether it is a credit card or doorstep loan payment, set up a direct debit. It would help you ensure regular loan payments. Likewise, it is not ideal for individuals with too many liabilities.
If you have rental payments, subscription, and electricity payments on direct debit, then it is advisable to drop the idea. For direct debits, you need to ensure a minimal sum in the account. For low-income earners, it may not be a good idea.
d) Pay even if you defaulted on a Credit card
After you default on your credit card, the debt collector may issue CCJ against you. It is a legal action against the pending bills. You can improve your credit history by informing the court and debt collector of your whereabouts.
Likewise, you can pay the defaulted loan if you want to. It would not help your credit score immediately but help you qualify for better rates.
It may benefit you as different lenders have different ways to analyse a profile before loan approval. It may work in favour of some, while others may ignore it. One rule of thumb is – if your default is not older than 1 year, you can expect better rates if you qualify for a loan.
e) Analyse your spending and reduce it
One often misses the most important aspect when it comes to paying debts. The more you save, the sooner you can clear your debts. Analyse your discretionary expenses and list them. Identify the ones you would like to keep and ones to let go. If you could save even €2500/per month, you can utilise it for clearing off your debts. Consider things like:
- Unused subscriptions
- Reduce dining out on weekends
- Reduce random movie trips
- Shop on the discounted day
Apart from this, keep a check on the ongoing loans. Seeking instant loans in Ireland for the shortest possible purpose seems inviting. Avoid the urge. Check whether you can meet your needs with an overdraft or by asking a friend.
Credit card debt is not healthy for your financial life. Avoid delaying payments. If you cannot pay, consult the provider immediately for a solution. He may provide you with a personalised way to manage debt repayments alongside doorstep loans to ensure healthy financials. Ensure the best balance of repayments on both sides by seeking ways to improve your income and investments.