What Happens If My Credit Cards Are Frozen

2016-02-12   minute read

Ian Schofield

Credit Counselling

Credit cards have seemingly become a staple to today’s consumer. Many credit card companies offer points or rewards systems as an incentive to sign up. Major credit cards are accepted by nearly every retail outlet, restaurant, service provider and online product or services provider. Credit cards are also accepted for use of automatic payments for almost any bill you may pay on a repeated basis. Furthermore, credit cards numbers are often requested as collateral for anything from starting a tab in a restaurant, to renting a car or a hotel room. It’s understandable that millions of Canadians use their credit cards daily.

Unfortunately however, many Canadians don’t realize the significant interest fees they are paying when they do not pay them down on a monthly basis. When you are carrying a balance, you are paying a much higher interest rate than if you were to apply for a line of credit, which is usually much more affordable. If you choose to use a credit card and are not able to pay the balance owing on your credit cards in full each month, chances are good you are experiencing financial distress and might not yet realize the seriousness of it. Interest adds up, and can become overwhelming – sometimes to the point of having one or all of your credit cards frozen. If one or more of your credit cards are frozen, it means you have either gone over your limit or not made at least the minimum payment when due. Both of those are likely indicative of a more serious issue.

If your credit card is frozen the first thing you need to do is contact the credit card company and find out why. If it is simply the case of a missed payment, it is an easy fix - make the payment and the credit card company will likely "unfreeze" your card, unless this situation has happened repeatedly. If you are over your limit you will have to make a sufficient payment to bring the balance owing back under your limit. Credit cards are now required to show on the statement how long it will take you to repay the amount currently owing if you only make the minimum payment. The longest time I have seen so far is 117 years – which seems to be a strong indicator that there is a problem.

I would, in either case, suggest that you sit down and review your total financial situation. If possible, consider getting a line of credit or consolidation loan at a much cheaper rate than you have been paying on your credit cards. If you can't do that because the amount you owe is too high for your income to support the loan or because your credit rating is poor, it might be time to consider other debt solutions.

While credit card debt can be overwhelming, financial freedom isn’t unattainable. Contact a Trustee in your area for a free, no-obligation consultation where he or she will be able to fully explain debt solutions like credit counselling, consumer proposals or bankruptcy, so you can choose the route that best suits your personal situation.

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