I Missed a Credit Card Payment… So What?

I Missed a Credit Card Payment… So What?

By Michael Peterson
In July 26, 2020

We talk a lot about paying your credit card bills on time. Why?  Because it’s REALLY important when taking control of your financial life. By knowing when your bills are due and getting into the habit of paying them by the deadline, you’ll reduce your stress. You can also save money, boost your credit score, and position yourself for lower-interest credit in the future. 

Those positive reinforcements should be incentive enough. But some folks might be wondering about the negative ramifications. If you’ve ever said to yourself, “I’m just not going to pay my bill,” read on!

If you don’t pay your credit card bill on time, you’ll face late fees, higher interest rates, and damage to your credit score. Continued missed payments will subject you to a world of financial hurt: Your card could be frozen, you could be hassled by a collection agency, and you might get sued.

Let’s take a look at the consequences.

Missing a Single Payment 

You’ll see an impact after just one missed payment. You’ll incur interest on your purchases for the missed billing cycle – which is always the case if you don’t pay off the full amount you owe. But you’ll also see a late payment fee added to your balance, typically up to $40, that immediately starts accumulating interest based on your standard annual percentage rate (APR). If you’re in an introductory low or zero-percent APR period, your credit card issuer might also revoke your special rate. 

If it’s your first offense, you might be able to convince your bank to waive your late payment fee and restore your special APR period. Contact them right away and explain why you failed to make the payment.

After two missed payments, your card issuer is allowed to charge you a penalty APR of up to 29.99%. The good news is that your bank is legally required to review your account every six months to determine if you’re eligible to have your lower interest rate reinstated. So if you make at least your minimum payments for the six-month review period, the bank might restore the original APR. 

Skipping Multiple Payments

After three months of missed credit card payments, you’ll rack up more late fees (by this point, you could be looking at more than $100 in fees). You can also expect your credit card issuer to report your account to the credit bureaus as delinquent, meaning you failed to make the minimum payment on time. (Keep in mind that some of the stricter card issuers report delinquencies after only one missed payment!) This delinquency notice will damage your credit score and clings to your credit report for seven years.

The more time you delay making a payment, the more likely you are to get calls from the credit card issuer’s internal collections agency. On the plus side, the collections department might be willing to negotiate an alternative payment plan to enable you to make lower minimum payment amounts. On the negative side, you could face closure of your credit card account – further damaging your credit score.

Never Paying Your Bill

Lots of people carry a balance from month to month, but they still make at least the minimum payment. But what if you never pay a credit card bill? The simple answer: Expect legal action. Debt collectors will use whatever legal means they have to collect from you. This usually means taking you to court to force you to pay. They could get a lien placed on your bank account or have your wages garnished.

Although you can’t be sent to debtor’s prison, the bad credit reputation you’ll earn will haunt you: It could prevent you from being eligible to rent an apartment, buy a home, lease a car, or even land a new job. 
We understand that there are times when you just can’t pay off your credit card balance. At the very least, try your hardest to make the minimum monthly payment. If you’ve run into financial straits with seemingly insurmountable credit card debt, don’t hesitate to call on the friendly experts at DebtGuru.com. We will work with you to find solutions that will help you get back on track.

Mike is the author of “Reality Millionaire: Proven Tips to Retire Rich” and he has been published in a variety of local and national publications including Entrepreneur Magazine, Deseret Morning News, LDS Living Magazine, and Physicians Money Digest. He holds a B.S. in business administration from the University of Phoenix.

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