SBI Credit Card Settlement Process: Step-by-Step Guide
Struggling with overdue payments on your SBI credit card? If your outstanding balance has become unmanageable, a one-time settlement (OTS) can help you negotiate with the bank to reduce your debt burden. However, while a settlement can provide short-term relief, it can also affect your credit score and future borrowing capacity.
This guide explains the SBI credit card settlement process, its benefits and drawbacks, and the steps to apply.
What is SBI Credit Card Settlement?
A credit card settlement is a process where the bank allows you to pay a reduced amount to close your outstanding balance instead of repaying the full dues. The bank may waive off penalties, late fees, and a portion of the principal amount.
However, your account will be marked as “settled” instead of “closed” or “paid in full”, which can negatively impact your credit score.
When Should You Consider Credit Card Settlement?
You can consider SBI credit card settlement if:
- You have missed multiple payments and are facing financial hardship.
- The total outstanding balance has grown beyond your ability to repay in full.
- You are receiving legal notices or recovery calls from SBI.
- Your account is on the verge of being reported as a Non-Performing Asset (NPA).
SBI Credit Card Settlement Process: Step-by-Step Guide
1. Evaluate Your Financial Condition
Before approaching SBI, assess your financial situation and determine how much you can afford to pay in a lump sum settlement.
2. Contact SBI’s Collection Department
Reach out to SBI Card Customer Care or visit your nearest SBI branch to discuss your settlement request.
SBI Credit Card Customer Care: 1860-180-1290
You may also receive calls from SBI’s recovery department or third-party collection agencies. If contacted, discuss your inability to pay the full amount and request a settlement offer.
3. Negotiate the Settlement Terms
SBI may offer a settlement amount depending on:
- The total outstanding balance
- Your financial hardship
- Your past repayment behavior
You should try to negotiate a lower settlement amount and ask for waivers on penalties and interest.
4. Request a Written Settlement Offer
Once SBI agrees to a settlement, ensure you get a written confirmation mentioning:
- The final settlement amount
- The due date for payment
- A statement confirming that SBI will close the account after the payment
Do not make any payment without receiving an official settlement letter.
5. Make the Payment Before the Due Date
Pay the agreed settlement amount within the specified timeframe. Ensure you keep a receipt or proof of payment for future reference.
6. Obtain a No-Dues Certificate (NOC)
Once the payment is completed, request an NOC from SBI stating that your dues have been settled. This is crucial in case of any future disputes.
7. Monitor Your Credit Report
After settlement, your CIBIL report will reflect the status as “settled”, which is less favorable than “paid in full”. The settlement record remains for up to 7 years, which may impact future loan approvals.
Impact of Credit Card Settlement on Your Credit Score
- Negative Impact on Credit Score: Your score may drop significantly after settlement.
- Reduced Chances of Loan Approval: Banks consider “settled” accounts as a red flag, making future loan approvals difficult.
- Record Stays for 7 Years: The settlement status remains in your credit report, affecting your financial credibility.
Alternatives to SBI Credit Card Settlement
If you want to avoid credit score damage, consider these alternatives:
- Convert Dues into EMIs: SBI offers EMI conversion plans that let you repay the dues in smaller installments.
- Balance Transfer: Transfer your outstanding balance to another low-interest credit card.
- Debt Consolidation Loan: Take a personal loan to clear credit card dues without affecting your CIBIL score.
- Credit Counseling: Consult a financial expert to explore better repayment options.
Final Thoughts
An SBI credit card settlement can provide temporary relief, but it can have long-term consequences on your credit score and financial credibility. If you choose to settle, make sure to negotiate wisely, get written confirmation, and take steps to rebuild your credit after settlement.
Need Help with SBI Credit Card Settlement? Settle Loan can assist you in negotiating a favorable settlement while guiding you on rebuilding your credit.
