When a credit card user is not in a financial position to repay the credit card bill, they approach the bank or the card issuer and request a settlement. A settlement can involve a number of options from a credit transfer to converting the credit card bill into an EMI.
This article covers the ways in which a credit card settlement is carried out, and what it means for the user and their credit score.
Here's all you need to know about how to pay your credit card bill.
Settlement is not an option you can take whenever you hit a rough patch financially, and are unable to pay your dues. Because financial institutions do not usually approve settlement requests often or easily.
There are high chances that your card issuer may reject your application if you do not pay a lump sum amount. Moreover, the credit card settlement percentage is not uniform. So, the actual settlement amount may depend on how well you negotiate with the card issuer.
In conclusion, credit card settlement is a viable option for individuals who are unable to repay their credit card bills due to financial constraints. However, it is not a decision that should be taken lightly, as it can have significant consequences for one's credit score and future financial prospects. The settlement process involves reaching a mutual agreement between the card issuer and the customer, either through a lump sum payment or a negotiated settlement amount.
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No. Credit card settlement affects your credit score negatively. A negative credit score may make applying for new loans or cards difficult.
No fixed rule specifies the credit card settlement percentage. It depends on the analysis done by the card issuer. The card issuer may also reject the application and take the customer to a court of law.
Yes. Credit card settlement affects the cardholder's CIBIL score negatively. But, the impact will be greater if the cardholder does not pay anything.
Yes. You can negotiate your credit card settlement amount. Your card issuer may decrease the settlement amount if they feel you are serious about repaying the outstanding due. But note that this is generally quite unlikely. Usually, the credit card issuer will pass the settlement case to a recovery agency that might use some very harsh tactics to recover your bill amount.