This is one of the most horrifying experiences of my life and would probably have pushed me into dire straits if my friend had not bailed me out of the tough situation. The root cause of the whole fiasco was my credit card company.
I had one credit card in my name which was used quite heavily due to it being the sole one. This is a credit card that I have had for the past five years and it treated me quite nicely for all those years. Furthermore, I also never defaulted or went over the due dates of my payments for this card.
Recently, I bought a new house that required a significant sum of money which I had loaned from a reputable lending company. However, I fell sick for a week and defaulted on one payment for the house’s loan. Since I was sick, my hospital and treatment bills were paid with the help of my trusty credit card and hence became high for that month.
When I received the credit card statement, I realized that the interest rate had been increased four times the original value. This combined with the high balance on my card was a bit more than my liquidity permitted at that stage. I had to borrow from a friend to avoid the exorbitant interest rate.
When I asked my financial consultant, I realized something that appalled me. When I got this credit card, there was a clause that allowed my credit card company to increase the interest rates without letting me know if I defaulted on any kind of payment for any lending company.
This was written in legal jargon which is probably why I never figured it out myself and needed external help to understand it. My advice to you is to beware of such situations and keep your credit card balance within manageable limits.
