How to resolve the credit card debt

There are around 20 million credit cards in Thailand currently, approximately 14 million cards are regularly active, and approximately 1 million cards are problematic or overdue accounts. What is even more shocking is that the outstanding balances of more than 30 days are continuously increasing. (Source: National Credit Bureau Company Limited).

It cannot deny that "credit card" is the first thing that many people want to own after having a job with a salary. Because a credit card provides more convenience in spending which is not considered wrong if used and does not cause trouble.

However, many cardholders may accidentally spend more which causes debt and may not be able to take responsibility. This can be observed from the number of problematic or overdue credit card numbers. It reflects that people with credit card debt begin to have debt faster, longer and more. Let's see the main reasons causing credit card debt.

1.Having many cards

Open your wallet and check how many credit cards you have. Most of the people who have payment problems or overdue payment often have many cards. The more cards you have, the more likely you are to use them. Simply say that many cards have a higher spending limit than the ability to pay.

2. Continuously use

It is noticed that people with credit card debt problems tend to like spending via cards, whether buying a few small items at the small price until the price of a hundred thousand baht and when it's time to repay, they use the minimum payment method.

3.Withdraw cash from credit card

Credit cards are a type of loan. Many people use it as a helper during the shortage of money. Some people even withdraw a cash advance from credit cards to spend and pay the minimum amount which causes a high-interest burden.

4. Keep the payment for a credit card the last item

When the credit card debt can be paid at the minimum amount, therefore many people will pay off other issues before the credit card debt. This will cause the cardholder to pay interest at a rate that is higher than the interest rate of other loans.

However, once debt from credit cards start to cause problems, it’s a must to find a solution immediately. There are some examples of how to solve a problem.

1. Stop using credit cards

The most effective solution for debt from a credit card is to stop using credit cards and spend by cash only. Then, make a plan to manage all debt problems quickly.

2. Gradually pay the debt as soon as possible

A credit card has interest rates of up to 20% per year. Importantly, if you do not pay credit card balances by the due date, interest will be calculated from the date of card used and on a daily basis. Therefore, if you pay a minimum of 10%, there will be interest burdens that continue to increase continually because financial institutions will charge interest in two layers. First, calculate the interest on all transactions. Second, calculate the interest based on the remaining outstanding balance after the initial payment has been made.

Therefore, once you stop using credit cards, you must quickly pay off all outstanding credit card debt, which is to pay the debt more than the minimum of 10% set by the financial institution e.g. pay at 20% debt to reduce the principal and reduce interest.

3. Consult with creditors

When you have tried to resolve but debt still exceeds your ability, the solution is to talk to the creditors to find a way to compromise how to pay the debt, the best way of payment is. You should not neglect because the financial institution may file a lawsuit to the court and that will cause other more troubles.

4.Adjust behaviors of spending

You have to control spending by stopping unnecessary purchases such as clothes, shopping around and hanging out. Then, use the remaining money to pay off the credit card debt by trying to pay as much as possible.Many people may understand that credit cards are the root cause of debt problems. But in fact, the root cause is the cardholder who has spent more than his income and no plan of spending. So, if the cardholder consciously spends, there will not be any problem when the payment is needed.