Credit Card Debt

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Credit Card Debt

Overusing Credit Cards

Credit card debt is one of the most common ways that people find themselves in financial difficulty. If you’ve been overusing your credit card, you could find yourself in a position where it’s hard to do anything other than pay off your minimum balance on the credit card each month. However, it’s important to always try to make the minimum payment on your credit cards as any missed payments can affect your credit rating.

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Missed Payments

One payment missed:
If you have a good borrowing history, your credit card company may simply send you a polite reminder letter for payment.

Two payments missed:
You will get a written request and possibly a phone call demanding payment.

Three payments missed:
Each creditor will enlist a Collection Agency to press you for payment. Collection agencies may use a variety of tactics to get the money, including threats.

If you still haven’t paid off your credit card debt, court action may be taken against you.

Canadian Government Regulations

Mandated an effective minimum 21 day, interest-free grace period on all new credit card purchases when a customer pays the outstanding balance in full.

Lowered interest costs by mandating allocations of payment in favour of the consumer. For example, any payment made in excess of the required minimum must either be allocated to the balance with the highest interest rate first or distributed proportionally to each type of balance (cash advances, purchases, etc).

Provide information on the cardholder’s monthly statement on the time it would take to fully repay the balance, if only the minimum payment is made every month. For example, a balance of $1,000 on a credit card that charges 18 percent could take more than 10 years to pay off.

Mandated advance disclosure of interest rate increases prior to their taking effect, even if this information had been included in the credit contract.

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