Credit cards can provide great perks and allow you to earn cash back or rewards for your purchases. They also serve as tools for helping you build credit, which can be important if you want to buy a house or car one day.

But there are some risks involved in using credit cards, and if you’re opening a credit card for the first time, you may be nervous. But if you’re aware of the dangers of credit cards, you can avoid making these mistakes while using credit cards wisely and taking advantage of their perks, benefits and rewards.

Reasons that can make you a Credit Card Defaulter

What will happen if you become a Credit Card Defaulter?

  1. Negative Impact On Credit Score– Making late credit card payments or having missed payments lead to a lower credit score, which cancels out the major benefit that a credit card has to offer. Your credit score can be improved by effective usage of your credit card and timely repayment of your bills. It is necessary to have a good credit score in order to ensure that you are eligible for higher loans in the future. Not paying your bills in time will eventually hamper your financial health.
  2. Blocked Credit Card Account– Not paying your credit card bills for a maximum of 6 months will make you a credit card defaulter. You will be blacklisted from the bank, which, in turn, will block your credit card account.
  3. Legal Actions– Not paying your credit card bills for a very long time will indicate that you are a fraud. As a result of this, banks might take legal action against you and it will become difficult for you to take credit from anybody in the future.
  4. High Interest Rates– Upon non-payment of the credit card bills by more than 60 days, the credit card companies charge interest rates as high as 30% of the credit card overdue. This high interest rate is also applied on the new purchases that you’d make using your credit card. If you continue doing this, in almost no time, the interest on your credit card bill would be more than your actual credit card bill!
  5. Interest on Outstanding Balances– Contrary to what most credit card holders think, you are not liable to pay only the minimum amount due out of your total credit card bill before the due date. Even though it is widely believed that paying only the minimum credit card balance would not make you liable for interest charges, it is not true. In reality, you will be paying interest on the outstanding amount starting from your due date. Hence, it is strictly advised that you pay your credit card overdue in full.
  6. Asset Acquisition– As a result of non-payment of pending dues, banks will have the right to use funds available in your savings or other accounts to clear your outstanding balances. In worst cases, banks may also seize your properties/other assets to settle the dues.

Credit Card Balance Overdue Hazards & Remedies Explained

The best part about credit card is that there won’t be any interest if you pay dues in full and on time. But on non-payment or the payment of partial amount would lead to interest charges at the rate as much as 30%-40% per annum, quite high to bother you, right?


The solution would be to stop making fresh spends via the card and look for a suitable personal loan, which can be given at lower rates of 11%-25%, to pay off the debt easily The loan application may get rejected if you have defaulted on your dues. If at all that happens, you can then request the lender to convert your credit card outstanding into EMIs, which stand for Equated Monthly Installments. The EMI option can be given to you at 13%-25% interest rate for tenures of as long as 4 years. However, not all the due can be converted into EMI. As a matter of fact, banks allow conversion of those purchases into EMI which are not more than 30-60 days old. The other solution would be to transfer the outstanding credit card balance to another lender at lower rates. It will make the repayment easier.

The balance overdue could result from the non-stop late payment charges on failing to pay dues on time from one billing cycle to another. The charges can be anywhere between ₹100-700, depending on the overdue amount. Plus, there will be levies of interest and Goods and Services Tax (GST) to increase the dues further. So, you can get an idea of the strain your finance is going to face following this bad credit routine.


Control your impulsive urge to keep the bill to an amount that you can pay on time. With that, you eliminate the scope for interest and tax, provided you are paying dues in full. Plus, you can make an agreement with the card issuer to reschedule the due date if your salary arrives later to the same. The lender can thus change the date to enable a timely payment.

Constant late payments can impair your credit history, if not lower your credit score. The score ranges from 300-900, with 750 and above being considered excellent. Even if the score is good, a late payment riddled credit history can dampen your future credit aspirations.


Prioritize your spends according to your income and needs. Make sure not to utilize more than 30% of the limit offered to keep the bills payable on time. A timely payment routine would gradually raise your score and improve your repayment history at the same time.

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