Business & Finance

What Happens When You Don’t Pay Off Your Credit Card Dues in UAE?

As per a few estimates, the UAE has around 200+ options for credit cards. These cards are tailored for varying lifestyles & income brackets. Hence it is essential to understand that no particular credit card is better than the others or is suitable for all. Based on the usage, whether in a time of financial strain, for managing regular expenses, maintaining a cash flow or just indulging in your exquisite tastes, this small piece of plastic can be a great buddy and at the same time a debt trap.

If you do not repay your credit card dues, then you might be charged a late payment fee, receive higher interest rates, and cause damage to your credit ratings. If you keep missing your payments, your card might get frozen, your debt might get sold to the collection agency, and the debt owner might sue you & get your income garnished.

What Are the Consequences of Skipping One or More Payments on Credit Card?

You will be charged late payment fees for all the payments you miss within six months. This fee will be added to your balance and will start accumulating based on your interest on your Annual Percentage Rate. Some credit card providers waive off your late payment fee on the first violation or when you contact them & explain the reason for the default in the payment. The interest on the purchases made by you in the billing cycle will be levied on you if you have an outstanding balance, that is, you have not made the payment in full.

What Happens When You Never Repay Your Credit Card Debt?

When you never repay the debt on your credit cards, then the debt users will make use of legal actions to collect the debt from you. This might generally mean they will take you to court, forcing you to make the repayment.

Unpaid debts on your credit card are like an active time bomb. The more you ignore it, the more it will pile up. Gradually, these debts jeopardize the financial well-being of the cardholder and can turn into a nightmare for them. It is common for credit cardholders to miss the payment of their debts altogether. But credit card issuers have a protocol while dealing with these default cases. The situation might probably play out in the following manner.

1 Receiving Calls from Debt Collectors

If you keep missing the bills and payment reminders on your credit cards from your bank, you will get calls from debt collectors then. These debt collectors call you on behalf of your bank and will continue to pursue you until you make the repayment of your outstanding debts. When talking about how debt collectors take care of debt recovery cases, generally there is a difference between being persuasive & being upfront threatening. However, in these cases, this line often gets blurred. The most suitable situation is to make an agreement with your bank before the debt collectors begin to pour in.

2 Depositing of your Security Cheque

During your credit card application, your card provider takes a security cheque (undated) from you. The provider has the full right to get this cheque deposited in case it is unable to recover the amount outstanding from you.

3 A Police Case May Be Filed Against You

The debt on your credit card that has not been paid for a long time, might come striking back on you taking the form of a police case. Since the police, as well as the immigration system, are involved, there is a risk that you might get detained at the airport during entering or exiting any of the Emirates in the UAE. Leaving the country with a debt on your credit cards that is yet to be paid back, is not morally right. This will also put you under the risk of getting hounded by the debt collectors. Not only this, you may get caught at the airport whenever you come back to UAE or transit through it.

4 Damage to Your Credit Score and Credit Report

Not paying your credit card debt will take a huge hit on your credit score. It may also jeopardize what all chances you have of securing any additional debt in the future. It becomes unlikely to find any of the banks for taking a new loan or getting credit cards with a default in debt reflecting on your credit report.

What is Going to Happen to Your Debt After Death?

If a cardholder having a credit card debt passes away, the card provider is informed about their death & the assessment of penalties (like late fees) will be stopped. Usually, the debt gets transferred to the next party responsible. This responsible party could be a co-owner of the account or the spouse of the deceased person.

What Happens to Your Debt on Moving Out of UAE?

Even when you leave the UAE, the debt collectors will seek repayment of the debt on your credit cards. They may file a lawsuit against you and may cease the assets left behind by you. Depending upon the country you move to, they might also reach you overseas. When you leave the UAE, your credit history won’t follow you. Hence the penalties and the damage will keep piling up on your credit history. However, the credit bureaus in the new country you have shifted to will not have any credit history on you. You’ll have to build the credit through the scratch.

To Sum Up

You should never treat your credit cards as free-passes for spending money that you won’t be able to repay considering your financial resources. You should opt for a credit card only if you are capable of handling the temptation of overspending.

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