Let’s face it – no one’s perfect. We have all made mistakes in life, and when it comes to money and credit cards, we have all made a lot more mistakes in life. So what do you do when the credit card payment due date is nearing and you are unable to make timely payments on your outstanding bills? Not paying on time can land you in a pickle (not literally, of course), but there are some things that you can do to catch up.
Come clean with the bank
Telling the truth might sometimes be the most difficult thing to do, but it is also the most responsible, especially when you can’t even make the minimum payment on your credit card bill. Whether you’ve lost your job and had to settle for a lesser paying job, an emergency situation befell on you, etc. call your credit card issuer and explain the situation to them.
It is, in fact, a human on the other end of the receiver and can be understanding and even sympathetic towards your circumstance. You could request for a revision in your payment structure, an extended interest-free period or anything else that can help you make payments in the near future.
Enquire about the debt consolidation plan
This year, over 10 banks with the help of the Association of Banks Singapore (ABS) have participated in a repayment scheme to better help customers reduce their overall debt gradually over a period of time. This scheme is called DCP or Debt Consolidation Plan which has been put into effect starting January 23, 2017. Top banks including HSBC, UOB, OCBC, Citibank and Maybank among others have been on board to offer DCPs.
Therefore, if you’re unable to manage your credit card debt along with your other debts, you can apply for DCP with your bank. To be eligible for debt consolidation, you must be:
- A Singaporean or Permanent Resident (PR)
- Earn between S$20,000 and below S$120,000 per year, and the total value of your assets cannot be more than S$2 million
- the total amount of unsecured debts you have needs to exceed 12 times of your monthly income
Additional Reading: 5 Tips To Get Rid Of Debt
Redefine your budget
If you can’t keep up with your payments, then you need to restructure your expenses. Make a detailed list of everything that you spend on in a month from your rent, cable bills, phone bills, utility bills, eating out, entertainment expenses and so on.
Now there’s nothing you can do about your rent, you need to keep those payments rolling because you don’t want to be evicted, but how about reducing your expenses when eating out, entertainment spending and so on?
You don’t have to cut everything out and stop living your life, but you can reduce how much you spend on them. For instance, eat at less expensive places, switch to a lower cell phone plan, instead of watching 3 movies in a month, maybe curb them to 1 or 2 and no popcorn, etc.
At the end of the month, whatever extra money you have accumulated, you can use it to at least make the minimum payment on your next credit card bill. This way, the bank also will not report a missed payment to the credit bureau which can lower your credit score.
Approach Credit Counseling Singapore (CCS)
There’s nothing wrong with asking for help when we lose our way. CCS provides a host of services to consumers including credit counselling and debt management. They also conduct workshops on money management to help consumers help themselves in the long run.
However, if you’re still unsure about requesting assistance, you could always attend a talk specific to a particular service offered (e.g. credit counselling) that are conducted throughout the year. You could also read testimonials from people whom CCS has helped to get a better understanding of your own situation.
Not paying your credit card bills is a whole new way of living dangerously. They can snowball your debt and shrink your credit score faster than Usain Bolt running for his next championship. So do something about your credit card payments now, before it’s too late.
Additional Reading: 6 Tips to Get Out of Credit Card Debt Quickly
Disclaimer: This blog is solely for the purpose of creating general awareness about financial products and services available through banks/ other financial institutions in Singapore. For more details, please consult your financial adviser before purchasing.