The Consequences of Not Paying Your Credit Card BillCredit cards can come with some amazing perks, from lucrative rewards to valuable travel benefits, but those features only help you as long as you can pay your credit card bill on time. As easily as it can make your life better, using a credit card irresponsibly can wind up costing money and hurting your credit, with the consequences getting worse and worse over time. If you’ve recently slipped up on paying your bill, or you’re curious about the consequences of doing so, keep reading to see what happens when you miss credit card payments, as well as a few ways to make sure that doesn’t happen.

Missed payment penalties

Late fees

Missing your credit card bill’s payment due date, even by a single day, will result in having to pay a late fee. Credit card late fees aren’t too bad, but they’re high enough to be annoying, generally falling between $28 and $39, depending on your credit card and the number of late payments you’ve made in the past six months. If you didn’t owe much on your credit card bill, though, your late fee may be lower than that, as by law late fees cannot exceed your bill’s minimum amount due. We should note that some credit cards, like the Citi Simplicity Card – No Late Fees Ever (a NextAdvisor advertiser), do not charge late fees, but paying late could still result in some of the following consequences.

Damage to your credit

After you are roughly one month behind on paying your credit card bill, your credit issuer will report your account as delinquent to the credit bureaus. Since payment history can make up 35% of your credit scores, it’s likely that your scores will suffer some damage as a result. The extent of that damage depends on your circumstances, as a single late payment will generally impact higher credit scores more than lower ones. Using data from credit scoring company FICO, Equifax estimated that a 30-day late payment could cause a credit score of 780 to drop between 90 and 110 points, and a credit score of 680 could drop 60 to 80 points.

Higher APR

Once you’re 60 days late on your card payments, your credit card provider can begin charging you a penalty APR, a heightened interest rate that applies to future purchases, your current purchase balance and any remaining transferred balances you have. The current median for penalty rates is 29.99%, but you can find your particular card’s penalty APR policy by reading your credit card agreement. Penalty rates are frequently harsh, but they’re legally restricted in how tough they can be by the 2009 Credit CARD Act. It’s against the law for a credit card issuer to begin charging penalty rates before you are 60 days late on your bill, and once you pay at least your minimum amount due on time for six consecutive months, your issuer must set your APR back to normal.

Besides penalty APR, a late credit card payment can also affect any 0% intro APR benefits you currently have. Some credit cards stipulate that missing your bill’s due date will cancel the card’s promotional interest rates, and there’s no limit to how strictly a credit card provider can enforce a rule like this. If your card comes with a similar condition, even paying slightly late can put you at risk of losing your 0% intro APR.

Collections

Having a debt sent to collections means your credit card issuer doesn’t believe you will pay what you owe. Usually a card provider will resort to this when you’re more than 90 days late on your bill and after sending several notices, but be aware that lenders can get debt collectors involved at any time once you’ve missed a payment. Collection notices will stick on your credit reports for up to seven years, and will hurt your credit scores even worse than missed payments. Additionally, it’s very likely your credit card issuer will close your account if you’ve been sent to collections, which will wipe out any rewards you had and can harm your credit even more.

How to avoid penalties

If you’re already late on your credit card payment, here are some ways to mitigate the damage and set yourself up for success in the future.

Ask for late fee forgiveness

While it’s difficult to reverse the more serious effects of not paying your credit card bill once they happen, it’s actually not very hard to get late fees waived by just calling your credit card issuer and asking. Many card providers have an internal allowance of late fees they’ll let their customer service representatives forgive, which is typically one every six months. Some credit cards even come with late fee forgiveness as a feature, such as the Discover it Cash Back, though it often only works on the first late payment you make on your account. There’s even a card with no late fees at all, as noted above: the aptly-named Citi Simplicity Card – No Late Fees Ever. While late fee forgiveness won’t do anything for your credit reports or APR, it can help you save some money.

Set reminders and autopay

If you’re late on your credit card bill because you sometimes forget to pay, there are several tools that many credit cards come with that can help you. Most credit cards let you set up electronic reminders that will text or email you when your monthly payment is due. Alternatively, you can activate automatic payments that will cover your card’s minimum amount due, your entire card balance or a certain amount you specify. However, take care when using autopay as relying on it too much will take away some of your control and awareness related to your finances. It’s easy for autopay to accidentally do something bad, such as overdraft your bank account without you noticing.

Reorganize your finances

In the event that you’re missing your bill due dates because you can’t afford the minimum payments, you’ll need to buckle down and get your finances in order. Creating a budget is a good first step that will help give you more perspective on your spending, and let you see if there are any expenditures you can reduce to free up additional funds you can put toward your credit card bill. If you make a budget and find your minimum payments are too much for you to handle because of high interest charges, you may be able to reduce your payments by transferring the balance to a credit card with a 0% intro APR offer. That will let you pay off your debt without having to worry about interest for a while (well over a year, with many balance transfer cards).

Making one or two missed payments is a mistake almost everyone makes, but constantly paying your credit card bill late is a serious issue that requires immediate attention before the results get out of hand. Follow our credit cards blog to get the most out of your card while keeping the negative to a minimum.

Disclaimer: This content is not provided or commissioned by the credit card issuer. Opinions expressed here are author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. This content was accurate at the time of this post, but card terms and conditions may change at any time. This site may be compensated through the credit card issuer Affiliate Program.