Is it okay to not pay credit card debt? Consequences and how to handle it you need to know

1. Is it okay to not pay credit card debt?

Full payment of credit card debt is a mandatory requirement Clause 2 Article 17 Circular 19/2016/TT-NHNN, amended by Clause 9, Article 1 of Circular 17/2021/TT-NHNN. If not done correctly, cardholders may face the following consequences:

1.1. Pay fines

Late payment fees are applied when customers do not pay the outstanding balance on time. This fee usually ranges from 4% - 5% of the total outstanding balance.

For example: Mr. Hung has a total credit card debt of 12 million VND as of the end of the statement period in October 2024. November 15, 2024 is the deadline to pay the outstanding balance. However, by November 25, 2024, he still had not paid, meaning it was 10 days overdue. The bank applies a late payment penalty of 4%.

How to calculate Mr. Hung's late payment penalty:
12,000,000 x 4% = 480,000 VND

Conclusion: If Mr. Hung does not pay his credit card balance on time, he will have to pay a late fee of 480,000 VND.

1.2. Bear high interest rates

When you do not pay off the outstanding debt on time, the bank will apply very high interest rates, from 20% - 40%/year depending on the bank. The typical interest-free period is 45 days, including a 30-day statement and 15-day payment cycle. After this time, all outstanding debt will be charged interest according to the bank's regulations.

How to calculate interest rate:

For example, Mr. Hung uses a credit card with a monthly statement 15/10/2024 - 15/11/2024. He made the following transactions:

• October 16, 2024: Buy a phone for 6 million VND.
• November 1, 2024: Buy at the supermarket for 4 million VND.
• Payment term: 30/11/2024.
• Interest rate: 20%/year.

If by December 10, 2024, he can only pay 8 million VND, the remaining debt balance will be 2 million VND. Interest will be calculated on this debt balance and the number of days overdue:

Thus, if he can only pay part of the outstanding debt, Mr. Hung will have to pay an additional interest of 271,801 VND/day. year due to failure to pay on time.

1.3. Impact on credit history

Failure to pay credit card debt will reduce your credit score - an important factor affecting your ability to access financial services in the future. Some impacts can include:

• Limiting loan opportunities: Low credit scores reduce the ability to be approved for new loans, or cause customers to pay higher interest rates. 
• Obstructing the use of other financial services: Not only does it affect the loan process, low credit scores also make it difficult to open new credit cards, use installment services or other financial products.

1.4. Risk of criminal prosecution

Fraudulent behavior or intentional failure to repay credit card debt can lead to serious legal consequences, including:

• Imprisonment up to 3 years for debts from 4 million VND to less than 50 million VND, or less than 4 million VND if the violator has committed fraudulent acts, has been sanctioned for administrative violations or has a criminal record that has not been erased.
• Imprisonment from 2 to 7 years for the appropriated amount from 50 million VND to under 200 million VND.
• Imprisonment from 5 to 20 years for larger amounts or serious violations.

Additionally, according to Circular 11/2021/TT-NHNN, the bank has the right to file a lawsuit for credit card debts with outstanding balance of 2 million VND or more and overdue payments within 36 months.

2. Solution when unable to pay credit card debt

Given the serious consequences of overdue credit card debt, finding the right solution is important to minimize the negative effects. Depending on the current financial situation, customers can choose different approaches to handle the situation.

2.1. In case of ability to repay debt

If the customer still has enough financial capacity to pay the debt, the top priority is to handle the entire outstanding debt as soon as possible to avoid incurring high interest rates (from 20 - 40%/year). This is the optimal way to stop your debt from increasing and restore your credit history.

In addition, customers need to build a reasonable payment plan to balance their income and reduce unnecessary spending to avoid future debts.

2.2. In case of inability to repay debt

If you are having financial difficulties and cannot repay your debt on time, customers can consider support solutions from the bank. Many banks today offer credit card debt installment programs, allowing customers to split the debt amount to pay gradually, helping to reduce financial pressure and limit legal risks.

Applicable objects:

• Customers cannot repay debt on time but still have the ability to pay in the future.
• People affected by natural disasters, epidemics or objective factors.
• Customers with bad debt in groups 3 - 5 according to the classification of the State Bank.

Necessary documents:

• Application for extension of outstanding installment payments according to the bank's separate form.
• Specific debt repayment plan.
• Personal papers and documents proving financial difficulties.

3. How to avoid credit card debt in the future?

Credit card debt mainly occurs due to inability to pay or confusion about the repayment deadline. To limit these situations, customers need to build healthy financial habits through the following measures:

Track spending properly: 

You need to build a specific financial plan, clearly stating your income, fixed expenses and flexible expenses each month. This helps you have an overview and avoid using the card for unnecessary purchases, especially high-value transactions.

Understand important milestones: 

Keeping track of statement dates and payment due dates is essential to avoid missed or late payments. Most banks will notify you via email or SMS, so you should check these regularly. Note that the due date may change if it falls on a holiday or weekend.

Use automatic payments: 

Setting up automatic payments is an effective way to ensure you pay your debt on time. Not only will this help you avoid late fees, but it will also reduce the pressure of having to keep track of payment timelines.

Take advantage of incentives from banks: 

Incentive programs from banks such as cash back, interest rate reduction or annual fee waiver are good opportunities for you to optimize costs when using credit cards. Regularly monitor information on the bank's website or application to not miss any offers.

Monitor transactions regularly: 

Checking your transaction history periodically is the best way to detect unusual or fraudulent transactions. You can do this through your banking app or monthly statement. If you detect any invalid transactions, please contact your bank immediately for assistance in processing and protecting your account.

Establishing a financial reserve fund: 

Setting up a financial reserve fund helps you feel more secure when using credit cards. This fund can be used in emergency situations, avoiding having to rely on credit cards to pay unforeseen expenses.

4. Why should you use a credit card at SeABank?

Choosing a credit card from a reputable bank is an effective way to help customers manage their spending and minimize the risk of overdue credit card debt. Among today's banks, SeABank is an outstanding choice with advantages such as:

• Providing a variety of credit card options to suit personal and business needs, allowing customers to choose based on their purpose of use and flexible spending needs.
• Suitable for large spending needs and effective financial management thanks to high limits and smart spending management tools. This helps customers easily control all transactions without difficulty making payments.
• Offering cash back programs and attractive shopping incentives, not only helps save costs but also enhances customer experience when using credit cards.
• In particular, with SeABank's Internet Banking, customers can use a variety of features in a single application from account management, deposits, credit to online transactions without having to go directly to SeABank's transaction counter, bringing maximum convenience to customers.

With the information in the article, hopefully you have a clear understanding Is it okay to not pay credit card debt?", as well as effective solutions in case of financial difficulties. From contacting the bank to receive immediate support to making a reasonable long-term spending plan, you can completely overcome financial difficulties safely and effectively.

To experience modern, convenient financial products and support in emergency situations, you can refer to the website for more information. https://seabank.com.vn Or contact Hotline 1900.599.952 immediately for advice as soon as possible.