If you can’t pay your credit card bill, it’s important to act right away. Contact your credit card company immediately.
Many card companies are willing to work with you to change your payment if you’re facing a financial emergency.
Missing a credit card payment can happen to anyone You lose a job, get hit with unexpected expenses, or simply forget when the bill is due Whatever the reason, failing to pay your credit card bill can have serious consequences that get worse the longer you go without making a payment. This article explains exactly what happens when you don’t pay your credit card bill and provides tips on how to minimize the damage.
Your Credit Score Takes a Hit
The most immediate impact of an unpaid credit card bill is damage to your credit score. Payment history makes up a significant portion of your score – around 35%. Credit bureaus start reporting a late payment after 30 days and a missed payment after 60 days. A single late payment can knock 50-100 points off your score. The higher your starting score the less impact one late payment will have. However if you are already on shaky ground credit-wise, a missed payment can cause your score to plummet 100 points or more.
Just how much your score drops and how long it takes to recover depends on your credit history up to that point. Someone with an established history of on-time payments can bounce back quicker than someone with a sparse credit profile. The important takeaway is to get that late payment taken care of as soon as possible. Once you make the late payment, your score will gradually recover over the next few months as long as you stay current on your other accounts.
Expect to Pay Late Fees and a Higher Interest Rate
In addition to credit damage, a missed payment typically triggers late fees and a penalty APR. The fee for a late payment often starts around $30 for the first violation but can climb as high as $40 for subsequent late payments within six billing cycles. Some credit card companies will waive the late fee if it’s your first violation.
You’ll also likely get hit with a penalty APR, meaning a higher interest rate is applied to your existing balance Penalty APRs tend to fall in the 28-30% range compared to average purchase rates of 16-20% Just like late fees, issuers can choose to waive the penalty rate, especially if it’s your first offense. However, most will stick you with a penalty APR that can last 6 months or longer.
Your Account May Go to Collections
If you continue to miss payments, credit card companies will eventually charge off your account as a loss and send it to collections. Charge off typically occurs once your payment is 180 days past due, though some creditors will wait until you haven’t paid for a full year. At this point, the creditor writes the debt off, closes your account to future purchases, and sells your debt to a collection agency. Expect your credit score to plummet once this happens.
The collection agency will attempt to recover as much of the debt as possible. Collectors frequently use aggressive tactics like threatening lawsuits and seizing your assets. However, they must work within the confines of consumer protection laws. Know your rights when dealing with collectors. Don’t let threats of legal action intimidate you into agreeing to payments you can’t afford.
You May End Up in Court
If you are unresponsive to collection efforts, the agency may sue you to obtain a court judgment. If they win, the judgment legally entitles the collector to seize your assets, garnish wages, put liens on property, and take other steps to recover the debt. Failing to show up at your court date makes it highly likely the agency will obtain a default judgment against you.
Consult a consumer rights attorney if you find yourself facing a potential lawsuit over credit card debt. An attorney can review the details of your case and ensure the collector has followed proper procedures. They may also be able to negotiate an affordable settlement or payment plan on your behalf.
Tips for Minimizing Damage from an Unpaid Credit Card Bill
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Stop Using the Card Immediately – Putting additional charges on a card you can’t pay will only make the situation worse by driving up the minimum payment. Use cash or a different card until you get caught up.
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Call the Issuer – Contact customer service, explain your situation, and see if they’ll agree to waive late fees or reduce your interest rate. Issues like job loss or medical problems may qualify you for hardship assistance.
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Look Into Debt Relief Options – Debt management plans, balance transfer cards, and debt consolidation loans can provide ways to pay off credit card balances under more affordable terms.
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Prioritize Essential Expenses – During temporary hardship, focus limited funds on necessities like housing, utilities, food, and transportation before debt payments. Your credit will recover but you need to take care of your basic needs first.
The Bottom Line
Failing to pay your credit card bill triggers late fees, penalty rates, credit score damage, and eventual collection activity. The sooner you get caught up, the less long-term impact you’ll face. If money is tight, call the issuer right away and look into debt relief options. Manage the fallout properly, and your credit can fully recover within a few years. But ignoring the problem only makes it worse.
Consider credit counseling
If you need more help, credit counseling organizations can work with you on managing your money. Many credit counseling organizations are nonprofits. Before you sign up, ask if you will be charged, how much, and what services will be provided.
What steps can I take to manage my credit card bills?
Here are a few steps you can take to get your credit card bills under control.
What Happens If You Never Pay Your Credit Card? (Explained)
FAQ
What happens if you never pay your credit card bill?
If you keep missing payments, the credit card company may send collection agencies after you to get the money back, which can be very stressful. If you don’t pay for a long time, the company may sue you, which could lead to wage garnishment or property liens.
What happens if you don’t pay your entire credit card bill?
If this happens: Your lender will contact you to demand the missing payments are made. Then if you don’t make the payments they ask for, the account will default. And if you still don’t pay, they may take more steps, like hiring debt collectors to get the money you owe them.
Can you get in trouble for not paying a credit card?
Unpaid credit cards fall into the “civil debt” category and are not punishable by jail time. However, criminal offenses related to financial affairs, like tax evasion, could land you in jail. It’s important to know that ignoring judgments against you could result in serious legal consequences, including jail time.
What happens if you leave a credit card unpaid?
If you don’t pay your credit card bills on time, you might be hit with late fees and higher interest rates. Your credit score may also go down. If you don’t pay your debt for too long, your account may be sent to collections, and you could be sued for debt collection.
What happens if I don’t pay my credit card payment?
If you haven’t made a payment in 60 days, the lender may charge you a higher annual percentage rate (APR), but this will depend on your account type and issuer. In general, card issuers report late payments every 30 days. Late payments are only one of several factors that impact credit scores.
What happens if I stop paying my credit card bills?
If you don’t pay one of your credit card bills on time, the company may charge you fees, raise your interest rate, and tell the credit bureaus about the late payments. You could also end up being sued or being the target of debt collectors, which could mean that your wages or bank account are seized.
Should I pay off my credit card if I miss a payment?
Missing your credit card payments can lead to a string of expensive and credit-damaging consequences. But you don’t need to completely pay off your cards to avoid the worst ones. Even though making the minimum payment isn’t ideal, it will keep your account current and keep you from having to deal with fees, penalty APRs, and credit damage.
What if I have problems paying my credit card bill?
If you think you might not be able to pay your credit card bill, here are some things you can do to make things easier: If you can help it, avoid putting more debt on the card. Otherwise, your minimum required payment is likely to continue to rise, putting it further out of reach.
What happens if you fail to pay your credit card debt?
If you don’t pay your credit card bill on time for more than one billing cycle, you could face big problems like late fees, higher APRs, charge-offs, and even the threat of delinquency.
What happens if I don’t pay my debt?
If you haven’t paid the debt or replied to the 30-day message, you can expect to be asked to pay more quickly. You may be assessed late fees, and a penalty interest rate may be applied. Also, the credit bureaus will almost certainly report that you paid late, which will cause your credit score to go down. 90 days.
