In the Philippines, many people are hesitant to own a credit card due to the fear of accumulating debt. However, owning a credit card does not necessarily mean going into debt. By understanding how credit card debt works, cardholders can enjoy benefits like financial flexibility, rebates, and rewards. Proper management of monthly payments can prevent outstanding debt, allowing cardholders to maximize the advantages of their credit cards without financial strain. Credit cards provide a credit limit that functions like a loan, which must be paid off by a certain due date. Each month, banks send a bill with a minimum payment requirement, usually 3% to 10% of the total bill. If only the minimum amount is paid, the remaining balance carries over to the next month with added interest. Failing to pay even the minimum balance results in late fees, causing the debt to grow over time. Therefore, it is crucial to manage finances and pay the full amount on time to avoid accumulating debt. Not paying credit card debts impacts credit scores significantly. A negative credit score affects future financial transactions, making it harder to apply for loans or credit cards. If payments are missed for 90 days, the credit score suffers. Consistently missing payments worsens the score, affecting long-term financial opportunities. Even after settling debts, the damage to the credit score remains. Additionally, if payments are skipped for 60 days, the account becomes delinquent and may be handed over to a debt collection agency, complicating the situation further.
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Managing Credit Card Debt in the Philippines

In the Philippines, many people are hesitant to own a credit card due to the fear of accumulating debt. However, owning a credit card does not necessarily mean going into debt. By understanding how credit card debt works, cardholders can enjoy benefits like financial flexibility, rebates, and rewards. Proper management of monthly payments can prevent outstanding debt, allowing cardholders to maximize the advantages of their credit cards without financial strain.

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