What Happens If You Don’t Pay Your Credit Cards on Time?

By Charles Henry on January 30, 2010 In Business

So, you are up to your neck in credit card debt? Well, you are not alone, if that is any consolation. However, no matter what you do, you need to take the time and effort to pay back your debt or you could face any or all of the following consequences.

Endless Harassment

Your creditor will turn over the your credit account to professional collection service companies. These firms use pressure tactics to pester and harass delinquent debtors. We are talking about receiving calls, not just once a month or once a week but at least once a day.

Limited Job Opportunities, Maybe

The recession has made job opportunities limited as it is. However, when you have a less than satisfactory credit score, which was negatively affected by your non-payment of credit card bills, you are further limiting your chances for employment. Most employers will ask for your credit report and when they see your low credit score, questions will be asked and doubts will be raised.

Higher Interest Rates

Think of the domino effect in regards to raising your interest rates when you fail to pay your credit card debts. No thanks to the universal default clause in your bank contract, once you fail to pay on just one credit card, all your other credit cards will reflect an increase in interest rates. As such, your credit score will once again drop, which means that you will have more difficulty getting a new loan. And even if you do get that loan, your interest rates will be higher because of your higher credit risk.

Higher Insurance Rates

Just like new credit lines, your insurance rates will also go through a significant rise in premiums. Insurance companies also get your credit scores and then use it as a determinant in computing for your insurance premiums or, worse, on not renewing your policy. Because of such a sad turn of events, you will most often find yourself burdened by increased expenses on top of the debts that you have to pay. You end up in a worse situation!

Wage Garnishment Unlike in cooking where garnish means to beautify a dish, in the case of bad credit, wage garnishment is very unattractive for your financial well-being. It happens like this: When you enter into a contract with a creditor to make payments on your account and you failed to do so, a civil suit will be lodged against you in a process called garnishment. Basically, your wages and assets will have liens imposed on them – something that your employer could frown upon.

These are all worst-case scenarios of not paying your bills on time. You can avoid these situations if you tackle the problem head-on.

To learn the best ways of eliminating credit card debt click here!

For more free tips on becoming debt-free visit http://www.my-credit-center.com/

Article Source: http://ArticlesMind.com/author/gMike_Singh

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