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What happens if I miss my credit card payments?

Missing a single credit card payment might not seem like the end of the world, but the reality is that creditors will take action on any late or missed payments. So while you may think it’s not a big deal to skip an occasional payment, your card issuers take it very seriously.

Late payments can have an impact on your credit score and will affect your finances for months to come. Understanding the repercussions of a missed credit card payment can serve as a reminder to make sure you pay on time, every time.

How is a “late payment” defined?

Your card issuer will flag a payment as late if it is:

  • Less than the minimum amount due
  • Received after the due date.

In either of these scenarios, your creditor can charge a late fee that can be as high as $40. This fee will show up on your next billing statement and can quickly accumulate unless you contact your credit card company and get on top of any outstanding amounts owed.

If this is the first time you’ve missed your payment, it’s advisable to contact your provider and ask them to waive the late fee. Waiving a fee is at the creditor’s discretion, but if this was a one-off or genuine oversight, they may cancel the fee.

I’ve missed a credit card payment—what happens next?

In addition to applying a late payment fee to your account, a card issuer can also increase the interest rate on existing balances if you are over 60 days late in making payment.* This is known as a “penalty APR” (annual percentage rate).

This can cause your debt to spiral, as a higher interest rate increases the card balance and makes it more expensive, adding to the amount of time it will take to clear the debt.

After a higher interest rate is applied, you must make six consecutive monthly payments of at least the minimum amount, on time, before your prior interest rate can be reinstated.

If you are unable to get on top of your payments within the allotted 6 months, the penalty APR could stay on your account indefinitely. In this situation, it is worthwhile to seek advice from a debt counselor, who will be able to advise you on the available options to help you clear your credit card debt.

Another consequence of missing a payment is that you risk losing your credit card rewards. Some companies will not allow you to redeem any rewards until your account is up to date—others will simply cancel your accumulated rewards.

Will a late payment affect my credit score?

Generally, late payments are not reported to the Credit Bureau until 30 days after the due date.** So, if your payment was a one-off oversight and rectified within 30 days, you should be able to avoid any damage to your credit score and credit report.

If your account is not brought up to date within 30 days (some credit card providers allow 60 days), the missed payment will be added to your credit report and can stay there for up to 7 years. Any further missed payments will be added in 30-day increments up to 180 days, at which point your account is charged-off.

A charged-off account does not mean your debt is forgiven. It is a negative entry on your credit file that shows a creditor has not succeeded in recovering the debt. A charge-off harms your credit score and the ability to borrow money in the future.

You’ll also still be legally responsible for the amount owed, and your card issuer may sell the debt to a collection agency to recover it. This means you no longer owe the card provider but must pay the debt collection agency instead.

I can’t keep up with credit card payments—what should I do?

If you know you are going to default on a payment, the first step is to contact your card issuer before the due date. Many companies will negotiate and try to reach an agreement with you.

If your late payments have become unmanageable and your credit card debt has spiraled out of control, it’s advisable to seek help from a professional debt counselor. A personal consolidation loan or a debt reduction program are options that can help you take back control of your finances and reduce the stress associated with financial challenges.

Over 40 million Americans anticipate that they will miss at least one payment this year.*** If you are one of them, speak to the professional team at Effective Debt Relief at 800-940-5549 to discuss your options for a debt-free future.

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