Things to keep in mind to avoid debt when using credit cards

Sharing with VTC News reporter, Mr. Phan Hoang Quan, personal financial planning expert of FIDT Joint Stock Company, recommends that when using credit cards, customers must pay special attention to two issues: hidden fees and avoiding opening multiple credit cards.

Sunk costs are fees that arise during the use of a credit card even though the cardholder has not spent anything. The most basic is the annual fee. This is a common fee on most credit cards and all banks. There are some cards that waive the annual fee for life, but there are also cards that waive the fee for the first 1-2 years. When an annual fee arises, the bank will automatically charge the card, so the consumer has lost money.

Watch out for sunk costs and avoid opening too many credit cards.

Mr. Phan Hoang Quan, personal financial planning expert, FIDT Joint Stock Company

If there is only one card, users can easily grasp the monthly card statement via text message or email and quickly process it.

“If you open too many cards, sometimes the notification comes without you knowing which card it is and you can ignore it. Some people even save money by skipping the SMS notification service. This can easily lead to ignoring the notification, the annual fee turns into overdue debt year after year, causing the credit debt to increase,” the expert analyzed.

Second, be careful with free service packages. Some of them include Spotify, Netflix, Apple TV…

Depending on the case, users can receive 1-2 months of free service, even 3 months or more. However, when registering, it is mandatory to add a bank card. If the user adds a credit card, after the first few months of free use, the service will start deducting money from the card.

If you use too many cards and do not manage them well, leading to ignoring notifications, these monthly recurring costs can increase, thereby causing users to unintentionally increase their credit card debt. And if you still do not pay on time, it is inevitable that you will have overdue debt and be charged high interest rates by the bank.

"Therefore, users should be careful with free services and carefully read the promotional offers of each service before using the card to register," Mr. Quan added.

Financial experts also remind customers to absolutely not open a credit card on behalf of others. Because it is very likely that the cardholder will have to bear the bank debt once the card user deliberately delays paying the debt. When bad debt arises leading to a dispute between the customer and the bank, the person who opens the card will be at a disadvantage because the contract is in the name and has the signature of the cardholder.

Public opinion has recently been stirred up by the case of a customer in Quang Ninh whose credit debt of 8.5 million became more than 8.8 billion VND after 11 years.

Accordingly, Mr. PHA (Quang Ninh) was sent a notice by the Export-Import Bank of Vietnam (Eximbank) to recover bad debt due to spending nearly 8.5 million VND by credit card since 2013, up to now the interest debt has increased to 8.84 billion VND.

According to the bank, Mr. HA opened a Master Card at Eximbank Quang Ninh branch on March 23, 2013 with a limit of 10 million VND.

The customer then made two payment transactions on April 23, 2013 and July 26, 2013 at a transaction acceptance point. From September 14, 2013, the above card debt was converted into bad debt, the overdue period up to the time of notification was nearly 11 years. Immediately after that, the bank took many steps to recover Mr. HA's debt.

The bank further confirmed that issuing debt obligation notices to customers is a normal business activity in the process of debt settlement and collection. Up to now, the bank has not received any payment from customers.

However, the customer claimed that he was the victim of not spending 8.5 million VND on his credit card. In March 2013, he asked an employee at the Eximbank branch in Quang Ninh to make him a credit card, but in reality, he did not receive the credit card.

During the last meeting at his home in mid-2022 with the bank representative, Mr. A. himself also requested to clarify the signs of customer fraud by the other employee.

Cong Hieu

Source