What Does it Mean to Have a Credit Card Default?
The term “credit card default”, refers to a stage where an individual has become very negligent with making payments on their credit card.
When one has reached the default, it is considered a very serious credit card status, that won’t only affect your relationship with your credit card issuer, but also any credit you may have obtained otherwise.
The possibility of you getting approved for any type of credit, such as credit cards, credit card services, as well as loans, will not be very likely.
How does credit card default occur?
Credit card default occurs whenever we accept and agree to terms and conditions for owning a credit card on our name. When you agree to have a credit card, you are not only agreeing to make payments on the total amount you’ve spent using the credit card, but you also agree to all the terms and clauses embedded in the fine print, that states what would happen if you were to reach a position of not being able to make payments, or if you make late payments.
Credit card default occurs when you thus miss making a payment on your credit card for six consecutive months. If you reach such a stage, your credit card issuer will almost always close your account, as well as report your default status to the relevant credit bureau or bureaus, as there are three major credit bureaus that are likely to be informed of your status.
Going forward, you will not be able to obtain any credit, including loans and debt, unless you are able to repay the entire amount owed on your credit card.
When you reach the stage of having your credit card default, it is incredibly difficult to repay the amount owed, as high-interest charges will have accumulated over a period of six months, which means credit on top of the amount owed, times six interest rates, with each amount of interest is higher than the previous.
Options for clearing your credit card at this stage will be quite limited unless you have arranged to make payments with your credit card issuer from the get-go. Agreeing to an arrangement before reaching a stage of default, is the best option for anyone who cannot repay their credit card.