Credit card debt - when a client of a credit card company purchases an item or service through the card system as a result Debt accumulates and increases via interest and penalties when the consumer does not pay the company for the money he or she has spent.
- As result of not paying credit card debt on time are
- the company will
charge a late payment penalty(it vary from country to country and company to company) and report the late payment to credit rating agencies. - Being late on a payment is sometimes referred as
DEFAULT. - And late payment penalty itself increases the amount of debt the consumer has.
- the company will
Research shows that people with credit card debt are more likely to forgo needed medical care than others, and the likelihood of forgone medical care increases with the magnitude of credit card debt
Whenever customer accept a credit card, he/she agree to certain terms and conditions including making his /her minimum payment by the due date listed on his/her credit card statement.
When he /she miss the minimum payment by 6 months or more in a row [this may vary from Country and Companies], his/her credit card will be in default. If he/she don't make the payment after a stipulated period, Company (Issuer) will close his/her account and report the default to the credit bureaus.
There are many mistakes a card holder does and get into trouble, some of them are as - [source : https://www.financialexpress.com/money/credit-card-default-what-happens-when-i-default-on-credit-cards/1783942/]
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Paying Less Than the Minimum Payment- Payments less than the minimum amount due does not avoid actions as defaulter since it has no effect on overdue and it's almost no payment at all was made. Thus, when Credit Card Holder pays a little bit thinking that it will improve your situation, it provides no benefit at all.
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Paying Only the Minimum amount Due- The amount due is the total figure that CardHolder must pay to clear his/her liabilities in full and is likely comprised of multiple minimum payments.
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Seeking waiver of interest or settlement of dues by partial payment
Delinquency is a black mark on his/her credit report because it signals consumer irresponsibility or inability to pay.
[source - https://en.wikipedia.org/wiki/Credit_card_debt]
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Credit card debt in Europe:
- United Kingdom (September 2020): £59.2 billion
- Sweden (December 2020): 63.0 billion kr (SEK)
- Germany (November 2020): €7.7 billion
- Netherlands (November 2020): €1.0 billion
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Credit card debt in Asia:
- Singapore (December 2020): 10.3 billion (SGD)
- Taiwan (January 2021): 105.5 billion (TWD)
- Hong Kong (September 2020): 22.7 billion (HKD)
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Credit card debt in other countries:
- South Africa (September 2020): R 131.2 billion (ZAR)
- Mexico (March 2020): 13.4 billion (MXN)
- New Zealand (November 2020): 6.5 billion (NZD)
- Australia (2010): 50 billion (AUD)
[more information ref : https://www.applycreditcard-online.com/]
Financial threats are displaying a trend about the credit risk of commercial banks as the incredible improvement in the financial industry has arisen. In this way, one of the biggest threats faces by commercial banks is the risk prediction of credit clients. The goal is to predict the probability of credit default based on credit card owner's characteristics and payment history.
As Credit card debt and Defaults are increasing day-by-day. To come-up with AI-Based system to avoid any anonymous Issue of Credit Card to random person who is incapable and unable to repay dues.
Here, We are using an Machine Learning Algorithms to pridict the probability of a person can be default or not too avoid risk to increase Stress on Banks Asset and incurred unwanted Bad Debts.