What happens if you don’t pay your monthly credit card bills?

It’s a common scenario: a person gets their credit card bill and they find themselves not having enough money to make the monthly payment.

After a single missed payment, you will be charged a late fee. This late fee will be added to your credit balance. Then , your interest payments will begin to accumulate faster because your late fees were added in and you have to pay interest on late fees too. But this is just the tip of the iceberg.

In the long run, your credit score will decline if you fail to make monthly credit card payments.  If you do not pay your credit card bill again, you will be charged another late fee.  By this point, your credit card company will most likely report your late payments to the credit bureaus. Different credit card companies follow different time durations for reporting late payments to credit bureaus.

Most companies will report you when you are between 30 to 60 days late. But, once you are 90 days late, it will most definitely always be reported to the credit bureaus.

In most cases, if your payment is 30 to 60 days late, your credit score is likely to decline by 60 to 110 points. In other words, you would have to pay higher interest rates on future credit loans that you get.  In addition, your account will likely be provided to an in-house debt collections specialists.  

In case you miss 6 months of payments, you will again be charged a hefty late fee and your credit score will possibly decline below 600. This will make it extremely difficult for you to get credit in future. In addition, some credit card companies may charge off your debt by this point. They will sell your debt to a third-party collections agency who will be responsible for collecting the money from you.

It’s possible that your new creditor is a collections agency. The collection agency will resort to abusive practices to collect payments from you.

Regardless of your financial situation, aim to pay your credit card bills on time in order to avoid being harassed by collection agents and most importantly, avoid putting a dent in your credit report. If you can’t make a payment, call up your credit card company immediately to inform them of your unfortunate financial circumstances. Ask them to change your due date. If they agree, be sure to make the payment by the new due date. Alternatively, you can check out our useful credit repair strategies to strengthen your credit situation after missing your credit card payment a few times.