What happens if I don’t pay my credit card?

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Maybe you’re going through a tough financial stretch and couldn’t make your credit card payment. Or maybe the due date just slipped your mind. Either way, you may be wondering what actually happens if you don’t pay your credit card bill.

Missing your credit card due date by a day or two may not be the biggest deal, especially if you have a strong history of on-time payments and pay off your bill quickly. But allowing missed payments to become a pattern or ignoring them altogether can lead to many negative consequences that can significantly impact your finances. 

That’s why it’s important to understand the outcomes of not paying your credit card bill and take steps to address the situation as soon as possible.

The immediate consequences of missing a credit card payment

When you first miss a credit card payment, the consequences can pile up quickly. Here's what you can expect in the short term:

Late fees

If you miss your credit card payment due date, even by just a day, you'll likely be charged a late fee. Card issuers generally consider your payment late if they receive it after 5 p.m. on the day it’s due.

Late fees vary depending on your card issuer and account history but typically range from $25 to $40.Some issuers may waive the fee for your first offense, but future late payments can result in higher fees.

Earlier this year, the Consumer Financial Protection Bureau finalized a rule limiting credit card late fees to $8. Previously, the limit was $30 for the first late payment and $41 for subsequent late payments within six billing cycles. The late fee was scheduled to take effect in May and is currently on pause due to legal challenges. 

Interest charges 

When you carry a balance on your credit card from one month to the next, you'll be charged interest on that balance. If you miss a payment, you'll not only be charged interest on your existing balance, but you may also lose your grace period. 

The grace period is the time between the end of your billing cycle and your payment due date. During this period, you can pay your balance in full and avoid interest charges. The grace period length depends on the card issuer. For example, Chase cards and American Express cards have a grace period of 21 days. Capital One cards have a grace period of 25 days from the end of the billing period. 

Once you miss a payment, you may be charged interest on all future purchases, even if you pay your balance in full.

Penalty interest rates 

In addition to regular interest charges, some issuers may also impose a penalty APR if you’ve failed to make a payment for at least 60 days. A penalty APR comes with a much higher interest rate and is applied to your existing balance and future purchases. This means you'll pay more interest charges on your outstanding balance, making it harder to pay off your debt.

Penalty APRs can be as high as 29.99% and remain in effect for several months or indefinitely, depending on your card issuer's policies.

Losing promotional APR offers or rewards 

If you have a promotional APR offer, such as a 0% introductory rate, missing a payment could cause you to lose that benefit. You may suddenly face much higher interest charges on your balance.

The same goes for other card benefits, like cash back, points, or other perks. Most issuers require your account to be in good standing — i.e., no missed payments — to earn and redeem points. Some cards may even revoke your rewards if you miss a payment, and you could lose out on valuable perks you've worked hard to earn.

For example, American Express says cardholders will forfeit their points if they don't make their card payment within 40 days of a statement closing date. Chase will prohibit you from earning or redeeming points if you don’t make the minimum payment within 30 days of the due date.

Negative impact on credit score

Even a single missed payment can lower your score, making it harder to qualify for loans, credit cards, and other financial products in the future.

A missed payment won’t get reported to the credit bureaus (Equifax, Experian, and TransUnion) until it’s more than 30 days past due. This means paying your credit card bill before then won’t hurt your credit score.

Long-term impact of missed credit card payments 

While the immediate consequences of a missed card payment can be costly, the long-term impact can be even more damaging. Here's what you need to know.

Damage to your credit score

Your payment history accounts for 35% of your FICO score. Missing a card payment can have a significant negative impact on your credit score. 

“I always tell people that there is one day that can change the next seven days of your life,” says Erik Beguin, founder of Austin Capital Bank. “If you pay your credit card bill 30 days after your due date? That late payment won’t be recorded on your credit reports. Make it 31 days late? That late payment will haunt you for seven years.”

The longer your payment is overdue, the more severe the damage. According to FICO data, a 30-day late payment could lower a credit score of around 790 by as much as 60-80 points. For someone with a lower starting score of 670, a 30-day late payment could lead to a drop of 25-45 points.

Late payments can stay on your credit report for up to seven years, dragging down your score and making it harder to access credit when needed.

Difficulty qualifying for loans or credit cards

A low credit score can make it difficult to obtain new credit in the future.

"Lenders will consider you a riskier borrower if you have several late payments on your credit reports," says Mindy Oglesby, a certified financial planner and founder of Oglesby Wealth Strategies. "If you need a loan to buy a house or car, they will consider an investment in you to be riskier. To make up for that, they'll give you a higher interest rate. That makes it more expensive for you to borrow money." 

Whether you're applying for a mortgage, a car loan, or a new credit card, lenders will review your report to determine your creditworthiness. If you have a history of missed payments, you may be seen as a high-risk borrower and could be denied credit or offered less favorable terms, such as higher interest rates.

A FICO credit score of 670 and above is generally considered good. A good score allows you to access the best credit cards with lucrative rewards and travel perks. If late payments cause your score to drop, you may only qualify for secured or credit-builder cards. 

Legal consequences

If you continue to miss payments, your card company may decide to take legal action against you.

For example, your creditor may send your account to a collection agency. If you still don't pay, your creditor may sue you for the amount owed. If they win a judgment against you, they may be able to garnish your wages, meaning they can take money directly out of your paycheck to pay off the debt. Collectors can garnish up to 25% of your earnings under federal law.

This could also lead to a lien being placed on your property. If you sell your property, the creditor could be entitled to some of the proceeds to pay off your debt.

What to do if you miss a credit card payment

If you do miss a credit card payment, don't panic. Here are three steps you can take to minimize the damage and get back on track.

1. Pay at least the minimum as soon as possible 

As soon as you realize you've missed a payment, try to make at least the minimum payment as quickly as possible. This will help limit the late fees and penalty APRs you'll face. If you can't pay the full minimum, pay as much as you can afford.

2. Contact your credit card issuer

Don't be afraid to contact your credit card company if you're struggling to make payments. Many issuers have hardship programs or can work with you to create a payment plan. They may be willing to waive late fees or reduce your interest rate temporarily.

When you contact your issuer, be honest about your situation. Explain why you're having trouble making payments and how you plan to get back on track. The more proactive and communicative you are, the more likely your issuer is to work with you.

3. Consider debt consideration

If you're juggling multiple card payments and struggling to keep up, debt consolidation may be a solution. This involves combining your debts into a single payment, often with a lower interest rate. Some options for debt consolidation include:

• Balance transfer credit cards: You may be able to transfer your high-interest credit card balances to a card with a lower APR, often with a 0% introductory period. This can give you time to pay off your debt without accruing more interest. Just make sure you have a plan to pay off your balance before the introductory period is over. 
• Debt consolidation loans: This type of loan combines all your debts into one monthly payment with a fixed interest rate.  
• Credit counseling: A reputable credit counseling agency can work with you to create a debt management plan. They may be able to negotiate lower interest rates and monthly payments with your creditors.

How to prevent late payments in the future

Fortunately, the damage from late or missed credit card payments doesn’t last forever. The impact of one late credit card payment lessens over time as long as you practice good financial habits afterward.

“Time heals your credit,” says Barbara Quan, financial education manager for Golden 1 Credit Union. “The more time that passes from late payments, the more your credit score will increase.  The combination of time and on-time payment history helps rebuild your credit score.”

Once you've addressed any missed payments and gotten back on track, it's important to prevent late payments in the future. Here are some strategies to consider:

• Set up automatic payments: Most credit card companies allow you to set up automatic monthly payments from your bank account. This ensures your bill is always paid on time, even if you forget.
• Create a budget and prioritize debt repayment: Take a close look at your income and expenses and create a budget that prioritizes paying off your credit card debt. Look for areas where you can reduce spending and redirect that money toward your debt.
• Explore credit card alerts and reminders: Many credit card issuers offer alerts and reminders that can help you stay on top of your payments. You may be able to get a text or email reminder when your bill is due or an alert if you're approaching your credit limit.

Frequently asked questions about missed credit card payments 

The bottom line

Missing a card payment can have serious financial consequences, both immediate and long-term. If you miss a payment, you can take steps to minimize the damage and get back on track. Paying as much as you can as soon as possible, contacting your issuer, and considering debt consolidation can all help you regain control of your debt.
Going forward, setting up automatic payments, creating a budget, and using credit card alerts can help you avoid late payments in the future.

Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.