5 Dangerous Consequences of Not Paying Your Credit Card Bills

If you’re short on money, you might like the idea of ​​not paying your credit card bills. This may seem like your only option, especially if you’re in between or not paying more important bills like rent. Keeping a roof over your head is always a priority over keeping your credit card company happy.

Credit card bills may not be first on your priority list, but they’re not something you’ll want to skip for long. Missing a payment within a week or two is not a big deal. Your card issuer may be able to waive late fees if you call and ask. But leaving your credit card bills unpaid for more than a month can have dangerous consequences.

Here’s what can happen and what you can do if you’re having trouble making a payment:

1. Late fees and interest will be charged.

If you miss a credit card payment, you may be charged a late fee by the card issued. The maximum amount for the first late payment is $30 and for additional late fees within 6 billing cycles is $41.

So one missed payment could cost you $30. If you miss the next two, it’s $82 more. In a few months, the fee will be $112.

Your card issuer may also charge you interest if you don’t pay off your card statement balance in full. Most credit cards have high interest rates. According to the Federal Reserve, the most recent average interest rate is 21.47%. If your balance is $5,000, three months of credit card interest could cost you over $250.

2. Your card issuer may increase your rates.

Credit cards have high interest rates to begin with, but the rates can get worse. If you miss a payment, your card issuer may apply an APR penalty. Your card issuer will usually do this if your payment is at least 60 days delinquent.

Penalty APR varies depending on the card, but a typical rate is 29.99%. This could result in hundreds of dollars in interest charges.

3. Your credit score will fall off a cliff

There are many factors that affect your credit score, but your payment history is the most important. If you have a high credit score, one late payment can drop it by up to 110 points.

The good news is: Your payments must be at least 30 days late to be reported as delinquent on your credit report. If you miss a payment but it clears within 30 days, your credit is fine.

If your credit card payment is overdue for more than 30 days, your credit rating may be lowered. And the longer you stay delinquent on your cards, the more your credit is damaged.

4. That credit card (and other credit cards) may be closed.

Eventually, the card issuer decides to cut its losses and close the card. The time taken varies. Card issuers typically wait until your account is more than 90 days past due. Please note that you are still responsible for any remaining balance after your card issuer closes your account.

if there is anything else Credit card, those items may also be cancelled. This may happen even if you have made all payments with that card. If your credit score suffers significantly due to not paying off your credit cards, other card issuers will know about it. They may decide to close your card because you are taking on more risk than before.

5. Legal action may be taken.

When you open a credit card, you agree to pay off any debt you incur on that card. If you don’t, your credit card company may decide to take you to court.

Some card issuers decide to sell the debt to a collection agency instead of pursuing it directly. If that happens, a debt collector will call you. And if you can’t reach an agreement with them, the collection agency that owns your debt may decide to sue you.

What to do if you can’t pay your credit card bill

Before you skip it, see if there’s a way to at least pay the minimum amount with a credit card. For example, see if you can cut back on spending elsewhere or gain extra hours at work. The minimum payment amount is usually 1% to 2% of the balance, and paying this amount will help keep your credit card current.

If not, call your card issuer and explain the situation. Ask if there are any difficult programs. They may give you the option to pause payments, lower minimum payments, or lower interest rates. It’s in your card issuer’s best interest to keep you making payments, so they’ll likely work with you to do so.