Credit Card Settlement

POSTED BY Shyam Bhat ON June 14, 2012 4:54 pm COMMENTS (5)

My father is 62 years old and currently has an credit card outstanding of Rs 20,000/-
He has been totally ripped off over the last two years as he has only been paying the minimum payable amount every month (approx. Rs1200/- x 24 months) and his outstanding never went down substantially. I get nightmares thinking about the additional 20 k if we have to finish up remaining dues.

Is it a good idea to go for settlement with the credit card company?

Is it important for him to keep a good credit score in his retirement?

I assume he wouldn’t be getting any loan here on anyway, as he is retired. Am i right?
Will it reflect on the CIBIL score of any of the family members?
On contacting the credit card company, we were told that there should be no payment made for three months to be eligible for a settlement. This would technically bloat the outstanding even further. Is it worth taking the risk and going through all the turmoil dealing with the credit card company?

Can someone who knows the rules help me with some rational advice?


5 replies on this article “Credit Card Settlement”

  1. Rohit Gangadharan says:


    Just to add the Manish and Ashal, banks love customers like your father who keep paying the minimum due, this would make sure that they have a good principal to levi interest on and then there is a service charge also. Even if your father may not go in for any loans, I would suggest against a settlement. This will defanitely reflect in the CIBIL scores and his credit score will go down. In the event he has to be a co-borrower his score may affect your chances of getting a loan. I am saying this from personal experience, I am my father are co-applicants on my home Loan, even though i am paying the whole EMI. He was well over 60 when we applied for the loan. Please see if you can find a way to clear the debt by paying small amount of principle every month.


  2. Shyam

    Paying minimum balance will attract the interest on rest of the balance and I am sure it will be much higher than the MINIMUM AMOUNT saved by paying it .. also if you do not pay each month even the minimum balance , then the PENALTY is levied on credit card bill which will take it higher ..

    So its the ignorance which has resulted in the credit card debt of 20k , I do not see any problem or issue from bank side, they have just followed the credit card standard rules .

    This is not affect you or other family members because he is your father , but he should pay off the debt and clear the matter . After all its your father fault .


  3. Dear Shyam, May I know your father is still using that Card or not for current purchases?



    1. Shyam Bhat says:

      Hi Ashal, I forgot to mention my dad had destroyed the credit card two years back itself. Even despite that, his outstanding has been so high. He doesn’t need the card.

      1. Dear Shyam, As the case involves a Sr. Citizen who may not require a loan in his remaining life I’m deviating from the standard advice & ‘ll ask your father to stop payment of any dues. Wait for 4-6 months & then do not contact from your side. Let the bank come with an offer for settlement.

        Settle the O/s amount in one go & then forget the whole thing. Here I assume by that time, your father ‘ll be in a position to pay off the settlement amount in one go.



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