3 Tips How to Solve your Credit Card Problem


A P30,000 credit card debt that ballooned to almost P1 million because of interest charges?

(In US dollars, that’s $21,740 payment for a $652 credit card debt!)

Crazy, isn’t it?

Apparently not for the debt collection agency pestering PMT Forum member cheesycake who shared that a legal office sent her a letter demanding that she pay almost one million pesos for a P30,000 credit card debt she incurred four years ago.

At that rate, cheesycake is being asked to shoulder a compounded, monthly interest rate of around 7.50%! That’s a hefty 7.50% interest rate being compounded every month!

Compare that with the meager 0.50% to 1.00% interest rate for savings accounts per year offered by banks! Crazy indeed, isn’t it?

Debt collection agency tactic

A friend of mine, a lawyer, who used to work for a debt collecting agency told me that this really is a way for debt collection agencies to make money.

Credit card companies that fail to get payments from customers pass these uncollectible debts to a collecting agency normally staffed by lawyers and paralegals.

Armed with legalese, the collection agency sends demand letters to defaulting customers and threatens them with legal action if they won’t pay their credit card debt.

Collecting agencies resort to this threat tactic because they usually work on a “No collection, no pay” scheme.

If ever the customer pays, the credit card company gets a fixed share from the payment, while the rest is pocketed by the collecting agency.

You can thus imagine why the debt collection agency is demanding a lot compared to the original credit card debt incurred by the customer.

3 Tips How Not to be Drowned in Debt

So how not to be drowned by credit card debt? We have three (3) basic credit card tips:

  • 1. Don’t get a credit card if you won’t be able to meet the monthly payments;
  • 2. Use your card prudently; and
  • 3. If you use one, don’t run away from your obligation to pay.

PMT Forum member jigger also shared a friend who cannot get a bank loan after being blacklisted because he had a due record for non-payment of credit card debt.

Don’t ever think that a credit card debt you’ll decide not to pay will not come back to haunt you. They usually do.

So if you don’t want to be drowned in debt, simply follow our 3 basic tips on credit card use. To reiterate:

  • 1. Don’t get a credit card if you won’t be able to meet the monthly payments;
  • 2. Use your card prudently; and
  • 3. If you use one, don’t run away from your obligation to pay.

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