What happens if you miss a credit card payment

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Slipups happen; if you miss your credit card payment by one day, you most likely won’t experience negative repercussions — especially if you already have a demonstrated history of paying on time.

In the past, going weeks or months without paying would give rise to a number of consequences in addition to a late payment fee. Yet as the novel coronavirus has reached pandemic status, many credit card issuers are offering assistance, including waived late fees, reduced monthly payments and flexible payment timelines.

Though the support offered by issuers is helpful for those experiencing setbacks from job loss or other financial issues caused by COVID-19, these exceptions won’t last forever.

Late credit card payments following the coronavirus outbreak

Upon request, some issuers will pause the reporting of late payments to credit bureaus, meaning your credit score won’t be impacted. Should the assistance program outlined on your issuer’s site not be enough to cover your situation, contact your issuer directly to discuss alternative options.

If at all possible, try to avoid forbearance plans that allow you to halt payments altogether for a period of time. In many cases, you’ll still accrue interest, in turn adding to your debt.

Going forward: What happens when you don’t pay your credit card

Once all returns to normal, so will the consequences of missing payments.

Other than ushering in higher interest rates, late fees and the potential of a closed account, unpaid credit card bills and late payments negatively affect your credit score (in turn affecting your future approval chances). Your credit score is not only used by lenders but also by employers, insurance companies and landlords to determine your reliability.

If you find yourself unable to make payments, contact your credit card issuer. If your payment is late, you’ll still incur fees, interest and penalties, but your issuer may be able to work with you or extend resources that can help your situation. It’s better to ask for help than not communicate at all. Consider asking your creditor for a modified due date, reduced interest rate or payment plan (should you be experiencing long-term financial difficulty). Your issuer or may not honor your request, but it never hurts to ask about resources that may help.

What happens after 30 days

If your credit card bill is 30 days past due, a late fee and interest rate will be added to your minimum payment and any promotional APRs could be revoked.

Late fees can average between $25 and $37 (and that’s just for your first late payment). Most credit card companies will increase the late fee charge for subsequent late payments. For example, Citibank’s late fee goes from $29 to $40 for any subsequent late payment within the next six billing periods for some of its cards.

In addition to the late fee, your current interest rate will be applied to your balance. Depending on your credit card agreement, one late payment could cancel your promotional APR and your interest rates could balloon to the max amount. For some, this could mean interest would apply to the entire balance retroactive to the date of purchase.

At the 30-day mark, your issuer may or may not report your missed payment to credit reporting agencies.

What happens after 60 days

When your credit card bill is two months overdue, you’ll be charged additional late fees and possibly a penalty APR, if it applies to your credit card agreement. Penalty APRs can be upwards of 29.99 percent — substantially higher than regular interest rates.

After the 60-day mark, the lender will report a missed payment, which has the potential to live on your credit report for up to seven years.

What happens after 90 to 180 days (and beyond)

Within the first three months of not paying your credit card bill, the company will try to reach out to you by any means possible. It will be their last effort to recoup the money before they proceed with a charge off and sell the debt.

By now, your balance has increased exponentially because of compounded interest and fees, and you may be charged the highest interest rates available.

At the six-month mark, your account will be closed, charged off and sold to a debt collection agency. You can no longer negotiate with the credit card company and are open to litigation and wage garnishment.

A deeper dive into charge-offs

A charge-off is when a debt has been closed on the books and is considered “unlikely to be collected.” It is then sent to a third-party collection agency. Charge offs are derogatory marks that stay on your credit report for seven years. You may receive a 1099-C and pay taxes on it if you end up paying less than you owed on the debt in a settlement.

Frequently asked questions

Can I go to jail for not paying my credit card bills?

No, not unless you used someone else’s identity to get the card and make purchases. In the United States, you cannot go to jail for not paying your credit card bill. A creditor or debt collector should never threaten you with jail for not paying your bill.

What if I leave the country without paying my credit card?

If you neglect to pay your credit card bills and leave the country, your debt will still incur fees and compounded interest. It will also negatively affect your credit report and eventually be sent to collections.

The worst that would happen is the possibility of being sued and having your assets frozen and wages garnished. This would affect you if you worked for a U.S. company overseas. Extradition is unlikely for credit card debt.

Can my creditor garnish my wages for not paying my credit card?

Yes, your wages can be garnished for not paying credit card debt, but for this to happen, you must first be taken to court and a judgment must be filed against you. Then, a court order must be submitted directing your employer to deduct funds.

It takes a while to happen and occurs after your debt is charged off. By that time, you would have received notification the account was overdue and sold to collections. You would also get a notice of litigation and given a chance to appeal.

Once a judgment is granted to garnish wages, 25 percent of your disposable earnings can be garnished from your paycheck. Some states may differ in the amount that can be taken.

The bottom line

Letting credit card payments lapse will only damage your credit and add to an already increasing debt balance. Late fees and interest will compound the longer you wait to pay your credit card statement. If you forgot to pay the bill, or need help moving the due date, contact your issuer as soon as possible.

If you’re having trouble paying your credit card bills each month, there are options you can look into so you don’t have to miss payments and risk damage to your credit. One popular option is to use a balance transfer card (preferably one with no penalty rates), another is a debt consolidation loan. You can’t get approved for these methods unless you have a stellar credit score, so it pays to keep up with your payments.