Keeping up with credit card has become harder for a lot of people in India lately. According to TransUnion Cibil, credit card defaults, that’s when someone doesn’t make their minimum payment, have risen. Back in March 2023, the default rate was 1.6%, but by June 2024, it has hit 1.8%. While this might not seem huge, it signals growing financial struggles for borrowers.
But what exactly does it mean to default on a credit card? Basically, if you miss making at least the minimum payment by the due date, that’s considered a default. Each credit card provider has slightly different rules, but the gist is the same - you need to pay up, or you’ll face penalties. Missing a single payment might not immediately label you as a 'credit card defaulter', but missing consecutive ones, especially over 90 days, definitely will.
Here’s where it gets concerning. The total outstanding credit card debt in June 2024 was a staggering ₹2.7 lakh crore, compared to ₹2.6 lakh crore just three months earlier, and it’s been steadily climbing. To give you some perspective, back in March 2019, it was around ₹87,000 crore. That’s a massive jump, showing just how much more people are relying on credit cards.
Now, if you think just making the minimum payments will keep you safe from trouble, think again. Experts warn that credit scores don’t always tell the whole story. If you’re only paying the minimum, you're not technically defaulting, but you could still be at risk if your debt piles up, especially with high-interest rates on unpaid balances.
What happens if you become a credit card defaulter? Well, first off, you’ll face late fees and hefty interest charges. Over time, this compounds, making your debt harder to pay off. And don’t forget about your credit score, it will take a plunge, affecting your ability to get loans or even a mortgage in the future. In some cases, creditors could take legal action to recover the debt, and your access to the card could be cut off.
But here’s the good news - you have options. If you’re struggling, reach out to your credit card provider to negotiate a payment plan or consider consolidating your debt. Taking these steps can help you get back on track and avoid the long-term consequences of credit card default...............................................................................................
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