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Term: Never Pay Strategy

17 Oct 2015

DEFINITION of ‘Never Pay Strategy’
A colloquial term used to describe an individual who opens a credit card account, makes purchases on the card, and lets the card account lapse into delinquency shortly thereafter. The never pay strategy is adopted by a cardholder who never intended to pay the credit card bill in the first place, as opposed to someone who ran into financial difficulties that prevented servicing of the credit card debt.

BREAKING DOWN ‘Never Pay Strategy’
The never pay strategy is not one that can be successfully repeated at periodic intervals, since credit card delinquencies will appear quite promptly on an individual’s credit history, which would preclude an offender receiving credit cards from other issuers.

A credit card client who uses the “never pay” tactic may also find that the hassle of dealing with unpaid credit card debt more than offsets the money saved by buying things on credit and then not paying for them. Credit card companies have a variety of means at their disposal to pursue the recovery of monies owed on delinquent accounts, the most common of which are debt a collection agencies and judgements against the delinquent cardholder. The cardholder may find that he or she has to deal with daily calls and visits from the debt collectors, which can be quite intimidating despite the fact that consumer protection agencies prohibit the use of harassment or coercive tactics by debt collection agencies.

Another negative effect is the stain that a “never pay” tactic would leave on the cardholder’s credit history, which may result in credit being declined for big-ticket items such as appliances, a car or a house. Even if credit is offered, the interest rate on such debt may be well above the norm, in order to compensate the lender for the higher risk of lending to a perceived sub-prime borrower. Add it all together and the costs of using a “never pay” tactic are exponentially higher than the slim benefits obtained by procuring things with no intention of paying for them.

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