4 things you can do to avoid credit card overdue penalties

If you are panic stricken because of your inability to repay even your minimum amount due on your credit card, help is at hand. RBI may have just made life easier for you, as it has recently asked banks to revisit overdue charges on credit cards that are sky high currently. While this spells good news, it is not the end of troubles for you. So, if you are feeling bogged down, here some hacks to get out of a sticky situation like this.

1.Get in touch with your bank
If your case is genuine such as an illness you or a close family member is battling, job loss or some other serious problem that has led to a fund crunch, your bank may be willing to give you a hearing and try and find a middle path.

2.Penalties are still applicable
While the fuss of penalty may be rectified soon as a result of the RBI directive, you are still charged a penalty by your bank if you turn delinquent (i.e. you do not pay the minimum amount due) for more than 90 days. This amount ranges between Rs 100 to 500 if the overdue amount is below Rs 20,000, but for amounts of over Rs 20,000 this penalty may be between Rs 600-700. This is the exact reason why you have to be proactive in opening a dialogue with your issuer. If your case is genuine, these penalties may be waived off for at least the first two cycles, your grace period extended or the interest rate revised as the case may be. However, do be prepared to give up all other rewards and be prepared to pay some penalty, albeit of a less harsh value.

3.Try to think of ways to repay your debt
The first thing you do if you find yourself approaching delinquency is to stop using your card altogether. You do not want to pile up your debt burden any higher than it already is.

4.Keep a check on your CIBIL score
You issuer may be willing to consider your case and give you some temporary relief, but delinquency does mean that your bank will report the same to Credit Information Bureau Limited (CIBIL). As a result of which, your CIBIL score is going to take a major hit. Try and make all other repayments on time and work hard towards repaying your credit card overdue. Once you are done repaying your entire debt, access your CIBIL score and CIBIL report to see that things are back in order and you are in the best of your credit health. Having credit card overdue permanently, is like being at the long end of a rope called a personal financial crisis. The best thing to do is to try and repay as soon possible. So, if you are not there yet, let this serve as an alarm bell, and keep your credit card spend under check.
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About the author: Rajiv Raj is the director and co-founder of www.creditvidya.com.