Filipinos owe an estimated P400 billion in credit card debt as of June this year. While many are able to pay their balance in full or on time, based on the same period, some 6percent paid late or missed their payments.

The 6 percent was actually an improvement from last year’s 8 percent, but with the ECQ (enhanced community quarantine) reintroduced in many areas and now the granular lockdowns, credit card issuers are expecting delinquency levels to rise. The news that a 70-year old appliance store chain with branches nationwide is closing its doors signals the continuing strain the pandemic has placed on businesses and consumer wallets.

Don’t let the 6 percent default rate fool you. This number only shines the spotlight on the consumers who are already drowning in debt and unable to pay. Among the 94 percent that are able to meet their obligations for now, many are already close to defaulting as the economy continues to take a beating. If you are one of them, here are some tips to keep you from joining the 6 percent delinquents which will hurt your credit history.

#1 Stop using your credit card.

If you are only paying the minimum due and barely meeting the payment deadline, now is the time to stop using your credit card. Doing so will save you from paying the 2 percent add-on monthly interest rate on all future spending plus late fees you may incur from tougher times ahead. Do your best to pay down your credit card balance and clear the debt as soon as possible.

#2 Credit card debt will bleed your wallet.

A credit card is typically the most expensive debt you can take on, even with the cap imposed by the Bangko Sentral ng Pilipinas at 2 percent monthly or 24 percent annually. To avoid a debt trap, or get out of one, nearly all financial planners will advise you to start paying off your most expensive debt, which in the case of many, is their credit card debt.

#3 Appeal to your credit card issuer for help.

All creditors want to be paid, and your credit card company or bank is no different. While most entertain repayment term requests only after a cardholder becomes delinquent, why wait for that time? Tell them your financial difficulties, and how you would like to pay off your balance over a year or two and ask for zero or lower interest rates. Yes, zero interest is an option, and it has been offered to delinquent accounts to help them clear out their debt.

#4 Or look for better repayment deals.

Thanks to market competition, credit card companies now offer balance transfer promotions, as a way to “steal” another client. With balance transfer, you can apply to another credit card company that will offer a lower interest rate so you can pay off your credit card, in case your appeal did not work. The trick to make this work for you is once you transfer your balance, do not use your new card until you have paid it off. Otherwise, you are just jumping from the frying pan into the fire.

#5 Ask family and friends for help.

If #3 and #4 do not work for you, you still have a last resort which is to approach family and friends. Be honest about your situation, and make sure to discuss with them your repayment plan and offer to also pay interest. If you can provide collateral, even better, so this will not sour your relationship in the long run. Of course, the best way to preserve it is for you to pay as promised and clear your debt as soon as you can.

While you sort out your credit card debts, stick to paying cash and using your ATM. Tighten your belts and ask your family to support you. This is not the time for impulse shopping and scale down as much as you can as harder days are in the horizon. There is light at the end of this COVID-19 tunnel, but sadly for our wallets, it is still quite far off.

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