What Happens When You Stop Making Credit Card Payments?

Being unable to pay credit card bills is a challenge that many people face. It can be because of a layoff, a pile of debt, a medical emergency, or other reasons.  Even if you face financial challenges, not making your credit card payments only makes things worse. For instance, you could face higher interest rates and be charged late fees, and it also takes a toll on your credit.  When you don’t make credit card payments, the negative mark will remain in your credit report for seven years.  If you fail to pay for a long time, your account may go to collections and receive a debt collection lawsuit.

What Is Credit Card Delinquency?  

A credit card payment is considered late if it’s unpaid for 30 days, and they won’t enter it into your credit report until then. However, some creditors won’t report a late credit card payment until 60 days.  You may not be entered into the credit bureaus if you fail to pay. First, you may receive some fines. Then, the consequences become more severe as the debts pile up and take longer. 

30 Days Credit Card Late Payment 

Your payment history is the most crucial factor in determining your FICO score. Therefore, a late payment can lead to a drop in your credit score. You can see your credit score drop by between 50 and 100 points.  If you fail to pay the credit card bills for 30 days, some creditors may not report you to the credit bureaus. However, you can receive a late fee and penalty interest. 

60 Days Credit Card Late Payment

If you fail to settle your credit card payments for 60 days, you can face more fees and penalties, and your credit score will drop further.  If you’re late for payment for 90 days or more, your creditor can send your account to collections. Thus, you’ll have a debtor reach out to you.  Additionally, the card insurer can increase interest on your card and lower your credit limit. The non-payment could also take a serious toll on your credit score.  Your creditor can send you for the debt until it’s settled in bankruptcy or you pay it. 

What Do You Do If You Have Late Payments 

If you’re late on credit card payments, the longer you take to take action, the worse the situation becomes. However, you can try out various strategies to remedy the situation.  You can try contacting your creditors and explaining your situation. Some creditors can offer waivers for your fees. You should also contact the creditor if you think you’ll miss a credit card payment. Being open with people can help you settle the debt. Check your budget. Ensure you reduce your expenses as much as possible to start making payments. You can look for a cheaper house or take another job to complement your income. You can put your credit cards away to avoid adding other bills.  Debt consolidation can also help you deal with your credit card non-payment. Taking a personal loan or getting a balance transfer credit card can help. However, the balance transfer credit card can be disadvantageous if it has a lower credit limit than the original.  You can take a loan from your retirement account to pay off other debts. The loan can also come with lower interests than the other debts. However, you must play by the retirement account rules.  You can also take a home security loan where you use your home as collateral. You risk losing your home if you don’t pay the loan. You can also contact a credit counseling agency to have a credit counselor help you with your budget, review your finances, or develop a debt management plan.    You can read more about credit card debts and payments here