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If you stop paying one of your credit cards, the issuer may charge you fees and interest, your credit could be damaged and you may eventually find yourself the target of a lawsuit. The exact timeline, events and impact can vary, but here's what you may expect:
- One day late: The credit card company may charge a late fee and end a promotional interest rate.
- 30 days late: The card issuer can report your late payment to the credit bureaus.
- 60 days late: A penalty APR may apply to your balance.
- 90, 120 and 150 days late: The card issuer continues to charge interest and report your late payments.
- 180 days late: The card issuer may close your account (if it hasn't already), charge off the account and send it to a collection agency.
- At any point: The creditor or collection agency may sue you for unpaid debts and get a judgment that allows them to take money from your paycheck or bank account, or get a lien against your property.
You Will Be Charged Late Fees
The first thing that can happen if you don't pay your credit card bill on time is the card issuer may charge you a late payment fee.
The fee amount can vary depending on your card and current balance. However, the federal Credit CARD Act of 2009 limits the fee. At most, the late payment fee can be $29 for your first late payment and $40 for each subsequent missed payment.
If you're taking advantage of a promotional 0% APR (annual percentage rate), a late payment may terminate that promotion early, meaning you'll be liable for interest fees on your card's balance going forward, including the fees that are added to your balance.
Your Credit Score May Take a Hit
A card issuer can report your late payment to the credit bureaus—Experian, TransUnion and Equifax—once your account is 30 days past due.
Your payment history is the most important scoring factor in your credit score, and a late credit card payment can hurt your creditworthiness and lower your scores. The exact number of points you'll lose will vary depending on your overall credit profile.
Generally, people who have good to excellent credit lose the most points from a new late payment. Those who have poor credit may also experience a score drop, but it likely won't drop by as many points if their score already reflects a history of missed payments.
The card issuer can continue to report your account as late if you don't bring it current. Your credit report will reflect these updates and notes if you were at least 30, 60, 90, 120, 150 or 180 days late.
Late payments stay on your credit report for up to seven years and continue to impact your scores during the entire period.
A Penalty APR Could Kick In
Once you're 60 days behind, the card issuer can charge a new, higher penalty APR to your account that applies to your current balance and future transactions. If you bring your account current, you may be able to get back to your standard APR after making six consecutive on-time payments for at least the minimum amount due.
Your Account May Be Sent to Collections
Around the 180-day point, the credit card issuer will likely assume it won't receive a payment on the account and will then charge off your account. This accounting procedure lets the company deduct the unpaid bill from its earnings, but doesn't forgive your debt.
The card issuer may also send or sell your account to a collection agency, which will then try to collect the debt. By this point, late fees and interest charges may have brought the total balance much higher than the original unpaid amount.
Both the charge-off and collection account may appear on your credit reports and further hurt your credit.
When a series of missed payments leads to a closed account, those payments and related negative marks (such as the charge-off) will be removed from your credit report seven years after the first payment was missed—also known as the date of first delinquency.
Your Creditor May File Suit Against You
A creditor or debt collector can also sue you to force payment of a past-due debt. If the creditor wins, it may get a judgment that allows it to pull money from your bank account or directly from your paycheck. It may also be able to get a lien against your property.
If you're served with a lawsuit, don't ignore the case or the creditor may be awarded a default judgment in the creditor's favor. In some states, this may happen even if the debt is outside the statute of limitations.
What to Do if You've Missed a Payment
Whether you're about to miss a payment or already fell behind, one of the first things you should do is contact the credit card company. It may be able to set you up with a hardship plan with a more affordable monthly payment amount.
Or, if you missed a payment and quickly brought the account current, you can ask the issuer to refund the fees and interest it charged. It's not obliged to agree, but if you've otherwise been a good customer, the company may be understanding.
If you're struggling with multiple credit cards, you may also want to contact a nonprofit credit counseling agency and ask about a debt management plan. The counselor may be able to negotiate with the card issuers to waive fees, lower your monthly payments and bring your accounts current. You'll then make one monthly payment to the counseling agency, which will pay the credit card companies.
Set Yourself Up for Success
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 debt to keep this from happening; on-time minimum payments will keep your account current and allow you to avoid fees, penalty APRs and damage to your credit. If you're reasonably certain you'll have the funds available, you can set up automatic payments for the minimum amount to avoid accidental late payments.
Tracking your income and expenses with a budget could also help you avoid using your credit card for purchases you'll have trouble paying for later. But if your struggles don't stem from overspending, your best options may be to communicate with your creditors or get help from a nonprofit credit counselor when you start to fall behind.