I haven’t talked about anything serious lately, so thought I would make today’s post about something quite important, but often neglected.
As some of you are aware, my job entails unsecured debt solutions. A.k.a in short, collections.
So far, the job is great, good pay, good people, good workplace.
Of course, not everyday is a shiny smooth day, especially when you are collecting money off people- but then again it wouldn’t really be called a job right?? Even superstars have their shit days.
Everyday I deal with clients who have either overdue payments on their cards, or some, have exceeded their credit card limit, so they need to pay that over-limit balance.
As a consumer myself – or more victim of a credit reliant economy, I can understand how we need some sort of loan this way or the other to help pay for something…may it be a bill, may it be to buy something that costs a large amount that you can’t pay all out in cash although you HAVE the cash (because of course holding that amount will be dangerous in the first place etc..)…or in my case an addiction to shopping- buy now, pay later (because you can reimburse it later when you receive your wages).
The problem is, people tend to neglect their payments…because ok, some people don’t have the money now because they get paid on this date & that, lost their job, or they have other more ‘important’ bills to pay, or they recently moved house, or they were sick in hospital etc…I get it, trust me I do, but some others DO have the funds, it’s just that they consistently ‘forget’ to make the payments & they get mad if we call them about it. Some even get mad when told the amount is $xx dollars because they refuse to believe they spent $$xx on Bras & Things & / or have exceeded over-limit from online porn addiction! (that was sarcasm before if you didn’t get it)
It is also quite sad to see that some of the people I come across can be so much younger than me, & yet have already worked themselves up to a terrible credit payment behaviour, or worse, listed as a bad debt. Whereas, there are also people who are so much older than me, that can be so…. irresponsible with their finances.
Some are nice about it, apologetic, urgent in the matter & are very scared to be labelled a ‘debtor’…whereas some (scarily enough the younger generations) well…just..don’t care.
Of course, again, as a consumer myself, I can see how at times the banks can end up giving credit to people who don’t really deserve it…for example, looking back when I was in uni & 21 at that time, I applied for a credit card for emergency purposes..(not really) & I wanted a $2000 limit. I told the lady that I am a student, work as a casual, looking for something with low interest & need at least $1000-$2000 limit.
When applying, I kind of thought, I don’t think I’ll get approved for it… Guess what? I got a Mastercard sent to me, approved with a $10,000 limit instead, ready for use.
Little did I know, I was paying about (if I remember) 20%+ interest rate to which later I found out that my older sister had a Mastercard from the same bank but with a lower interest rate than mine- 11+%! My friend also had the same one as her & he said it is a ‘student Mastercard’, Mastercard just for students! So…How on earth was I, a mere 21 year old, virgin credit-card user, working casual who only wanted like $1k limit get granted a $10k with 20.47% interest rate Mastercard????(to me at that time, this card was like an ‘ADULT’ version)
Of course, I was partly to blame for not going back to the bank & demanding to change it (can we do that?) but man…I have to say, giving something like that as easily is irresponsible…because look at what I have to deal with at MY work. LOL…yes yes what a double edged sword huh?
BUT I have to stress that while I may be irresponsible for buying stupid things, I am never irresponsible on making my payments on time. I have never ever got a collections call at all! I pay even more that the minimum monthly payment leh!-weekly some more!~ (amount stated in your bank statement if you don’t know hehe) I also make sure that I don’t use the card until at least most are paid off first.
It is a terrible cycle. Buy now because you think you can just pay later when you receive your wages, then you put your pay into the card, become broke because of it, then have to use the card again… & then history repeats itself. 😦
HOWEVER, I strongly believe that if you signed up for something like this, you need to take your own responsibility to make the payments, take ownership in the matter & not blame someone else for it. This is not just in credit cards, but also in life. With every decision you make, there are consequences.
Now that I work in this department, I learnt how to be MORE responsible as well to avoid the predicaments that happened to these clients. I think it is important that credit card owners get educated on some of these tips as well…& for those who never get a collections call, might as well learn a thing or 2 here.
Minimum Monthly Payments
I mentioned this on FB before, but it is great if you make a payment towards your card every week/fornight or however many days per month because you reduce your closing balance faster, but most importantly, you at least need to make ONE payment (the one you can’t neglect), which is your ‘minimum monthly payment’ (the amount printed on your statement). If you miss this one, then you most likely will fall into collections.
Be aware of your ‘cycle dates’. This is the date of when your statement gets sent out as well as when the payment is due by. Check the date of issue on your statement, then check when its due e.g if you have to make the payment by 20th of Feb, then roughly your payments should be paid before those dates every month! As long as you make a payment AFTER the date of issue & BEFORE the due date- especially if you are using BPAY etc, you should be in the clear. Of course the easiest way is to make a payment as soon as you receive the statements…but if you are still unsure of your cycle dates, just call your banks to ask! I know some people who sync their cycle dates with when their pay comes through so they won’t be late.
Methods of Payments
Remember how I mentioned you should be making payments after date of issue & before it is due? Be aware of the methods you use.
B-Pay (2-3 Business Days), Net Transfers from other Banks (1 Business Day), Cheque by Mail (8 Calendar Days), whereas Net Transfer from your own bank to the same bank your credit card is instant. As well as Cash at the Teller (highly encouraged) is also instant. Any other payments made at the Teller takes at least 1 Business day. If you pay at the Post Office which requires you to swipe card, you can only do this if there is NO BLOCK on the card. This applies to paying through the ATM as well. This again takes 1 Business Day. Most blocks on cards will be active again once full payment is made towards what was overdue on cards.
So… if your payment is due on the 14th, don’t use B-Pay exactly on that date! It will be late!
If you are not receiving statements, make sure that you check up with the Post Office or call up the bank to ensure the address spelling is right. Some of my clients don’t even remember they opted for Online Statements through their Net Bank. So, if you do have internet banking & haven’t received any statements, it could also be you are trying to save the trees & forgot about it.
Some banks, provide a free sms alert reminder that can be activated if you have internet banking with that bank, which could be an alternative to statements, especially if you travel out heaps & hardly bother to check your statements. Ask your banks if they provide this service!
A Direct Debit towards the card could also be an option! 😉 But remember that you need sufficient funds always from the savings account! & if you get irregular wages, Direct Debit might not be for you.
Over-Limit on Cards
How is it possible you’ve gone over the limit?
Many many ways! Some most common ones are…of course you spent too much on it & forgot the balance on the card. 2) Do you have direct debit coming out from your card towards your gym membership??? 3) Interest piling up although you are not using the card. So…be responsible in your spending & repayments! 🙂
Hmmm….I think that’s all the facts I can think of so far….but maybe you guys can learn a thing or 2 🙂
“No matter how much you hug your money, it never hugs you back”
Do you know? If EVERYONE was to withdraw all their savings, only first come first serve will get all their money back. Of course this is because our economy is mainly on credit. This is also called the ‘Bank Run’ or ‘Bank Panic’ effect. If there is a massive line outside a bank, others who are depositors with the bank that walk past will panic & think that the bank is going through trouble, so they frantically line up too to get all their savings out & so forth. This effect of large demand of net deposit withdrawals will cause the banks to first decrease its cash reserves, sell off liquid or readily marketable assets such as T-Bills & T-Bonds & to borrow more from the money markets. As more people join the line to get their deposits back, a liquidity crisis develops, hence the Bank needs to sell illiquid assets at fire-sale prices which will soon turn this liquidity problem into a solvency problem for the bank, hence not everyone will get their money back. But this effect (I personally call it the nosey effect) can cause a fundamental instability in our economy & have a serious effect on social welfare, where a banking system can be pushed into insolvency & failure just by unexpected large deposit drains & liquidity demands from a contagious ‘Bank Panic’, where people just want to follow others to withdraw money although they don’t know what’s going on!!
p.s (My mom doesn’t know I got a Credit Card…shhhh…Good thing she never reads my blog heheh)