What Happens If I Miss My Credit Card Payment?

A payment is considered missed when not received by the credit card issuer by the specified due date. While a payment made a few days late might not immediately affect a credit report, it can initiate financial and credit-related repercussions.

Initial Financial Consequences

Missed credit card payments incur direct financial penalties. Issuers typically impose a late fee, commonly ranging from $30 for a first late payment to $41 for subsequent late payments within six months. This charge is added to the outstanding balance.

Beyond late fees, a significant consequence is the activation of a penalty Annual Percentage Rate (APR). While a payment might need to be 60 days or more past due to trigger this, some card agreements allow it sooner. This penalty APR is a much higher interest rate, potentially reaching 29.99%, replacing the card’s standard purchase APR. This elevated rate can apply to new purchases and, in some cases, the entire existing balance, making the debt more expensive to repay over time.

Credit Report Impact

A missed credit card payment can significantly affect a credit report and score. Credit card issuers generally report payment activity to Experian, Equifax, and TransUnion. A payment typically needs to be 30 days or more past due before it is reported as late. Paying within this 30-day window, even if late, can prevent it from appearing on the credit report.

Once reported as 30 days late, it becomes a derogatory mark, which can substantially lower a credit score. Payment history is a primary factor in credit score calculations, accounting for a significant portion, often around 35%, of the score. A single missed payment can cause a notable drop, especially for individuals with excellent credit histories. This negative information can remain on a credit report for up to seven years, potentially affecting future borrowing opportunities for mortgages, car loans, or other credit products.

Steps to Take After Missing a Payment

Prompt action is required after missing a credit card payment. The immediate step is to make the payment as soon as possible. Since credit card companies often do not report a payment as late to credit bureaus until 30 days past due, paying quickly can prevent a negative mark on the credit report. Even if a late fee is incurred, avoiding a credit report entry is beneficial.

After making the payment, contact the credit card issuer directly. Explaining the situation, especially if it is an isolated incident, can lead to favorable outcomes. Issuers may be willing to waive the late fee as a one-time courtesy, particularly for cardholders with a good payment history. Discussing options like setting up a payment plan or inquiring about hardship programs can provide solutions if ongoing financial difficulties are present. Setting up automatic payments for future bills can also help prevent recurrence.

Consequences of Continued Non-Payment

If credit card payments continue to be missed, repercussions escalate. After 60 days of non-payment, the penalty APR may be applied to the entire outstanding balance, not just new purchases, leading to a rapid increase in the debt due to higher interest charges. As the delinquency extends to 90 or 120 days, the account status deteriorates further, causing more severe drops in credit scores. The credit card issuer may also close the account, preventing further charges and potentially affecting the cardholder’s credit utilization ratio.

After approximately 180 days of continuous non-payment, the account will be “charged off” by the issuer. A charge-off means the creditor has deemed the debt unlikely to be collected and has written it off as a loss for accounting purposes. Despite this, the cardholder remains legally obligated to repay the debt.

Charged-off accounts are often sold to third-party collection agencies or handled by the issuer’s internal collections department. These agencies will pursue collection through repeated contact, which can include calls, letters, and emails. If collection attempts are unsuccessful, the agency or creditor may initiate legal action, potentially leading to a lawsuit. A judgment in favor of the creditor can result in wage garnishment or bank levies, allowing them to seize funds directly to satisfy the debt.