Credit card debt settlement is a headache for sure. What should be a tool to make shopping easier becomes a relentless interest-bearing generator.
What to do in these cases? Is canceling the card a solution? But can debt card be canceled?
What does “cancel card” mean?
The credit card brings two functions of different natures:
- the means of payment function, which makes it possible to make purchases in a large network of establishments; Annuity collection refers to the availability of this function;
- the credit granting function, which allows installment purchases or to finance outstanding balances.
Think of a regular card with no debt or late payment. If you request its cancellation, what will happen?
First, the card expires and you no longer count on your limit for purchases or withdrawals. Thereafter, you should no longer have any annuity charges.
Invoices will continue to be issued as long as there is a balance due on the card. This is because the installment purchases will continue to respect the combined payment plan. In addition, the last purchases made shortly before cancellation may be pending.
In short, canceling the card basically means no longer relying on it for new purchases, leaving only the commitment to settle the remaining outstanding balance.
What if there are debts on the card?
Debts have a treatment apart. Until the date of the cancellation request, interest on the overdue amount is calculated based on the card’s revolving rate. Thereafter, the outstanding balance ceases to be corrected and the opportunity is opened to fully repay the updated amount of this debt or to negotiate with the institution an installment in fixed amounts that fit its budget.
While this discharge agreement is in effect, it is likely that the carrier will not cancel your card, just keeping it locked, with the possibility of reactivating it at the end of compliance with the agreement. During the card lockout period, there is no annual charge.
The advantage of canceling or blocking a card with debt is that you prevent it from becoming a source of continuous new debt and better repayment terms by negotiating debts already accumulated in the past.
Some precautions when requesting card cancellation or lock
- Find out about the channels opened by the institution for this purpose;
- Be clear about the procedures adopted by the institution;
- Require proof of the transaction request;
- Make sure you don’t have any accounts with your card debit card; If so, cancel your direct debit service and pay these bills by other means;
- If the card has insurance, make sure it is canceled;
- Be aware of annuity charges or other fees after requesting cancellation or blocking; if they occur, request compensation.
Canceling or blocking a credit card with debt is always possible, no matter how much the operators get in the way or claim not to do so.
Seriously consider taking this measure, as it is very effective in cutting down on the tendency towards increasing and out-of-control debt.
Always keep in mind that canceling or locking the card only stops interest on interest, but the outstanding balance already formed needs to be renegotiated on the best possible terms.
Finally, be clear that the best of all measures is to avoid credit card debt as much as possible.