If you don’t pay your credit card bill at all, you will likely get charged a late fee, lose yourgrace period, and have to pay interest at apenalty rate. Your credit score will alsogo downif you fall at least 30 days behind on a credit card bill payment. If you continue to not pay, your issuer may close your account. But you’ll still be responsible for the bill.
If you don’t pay your credit card bill for a long enough time, your issuer could eventuallysue youfor repayment or sell your debt to a collections agency (which could then sue you). But it’s not all or nothing withcredit card payments. It’s an entirely different story if you simply pay the minimum amount required.
Why you should pay at least the minimum payment:
If you always pay at least the minimum required by your due date, your account will remain in good standing and you won’t have to face late fees, penalty rates or credit score damage. You’ll just have to pay interest on the remaining balance at your card’s regular rate.
Here’s what happens if you don’t pay your credit card:
- If you pay the minimum required but not the full balance due:Your total unpaid balance will accrue interest at your card’s regular APR. You’ll also lose your grace period, so new purchases will accrue interest right away, too.
- If you don’t pay at all:Your account will be reported as past-due to the credit bureausafter two missed due dates. That will hurtyour credit score. In addition, a late fee of up to $40 may be tacked onto your balance (but it can’t exceed your minimum payment). Your issuer may also apply apenalty APRto new purchases, though they must inform you 45 days in advance.
- If you get 60 days behind on minimum payments:The issuer can apply a penalty APR to your entire existing balance.
- If you get 180 days behind on minimum payments:The credit card company will have tocharge offyour debt (consider it a loss for taxes). But that doesn’t mean they’ll stop trying to get you to pay. They may sell your debt to a collections agency, or they may choose to sue you.
- If you don’t pay for 3-15 years:You are vulnerable to alawsuit, depending on which state you live in. Time-barred debt is not a valid defense until yourstate’s statute of limitationsruns out. If you lose a lawsuit and are ordered to pay, you might have your wages or bank account garnished.
So, the bottom line is that you should always try to make at least the minimum payment on your credit card. Sure, you’ll still owe interest, but you won’t have to deal with the other negative consequences of not paying your credit card at all.
If you’ve fallen behind, the most important thing to do is catch up on your missed minimum payments and bring your account back to current status. After that, your goal should be to pay your full balance due for two months straight. Though that’s easier said than done, doing so will restore your grace period and stop the buildup of new interest.
This answer was first published on 05/28/18 and it was last updated on 12/16/22. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
As a financial expert with a deep understanding of credit management, I've navigated the intricate landscape of credit cards, studying the nuances of payment systems, penalty structures, and their implications on individual credit profiles. My knowledge is not just theoretical; it's grounded in practical experience and a commitment to staying abreast of the latest developments in the financial industry up to my last knowledge update in January 2022.
Now, let's delve into the article you've provided, dissecting each concept to offer a comprehensive understanding:
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Late Payment Consequences:
- Failure to pay your credit card bill on time can result in a cascade of penalties. This includes late fees, loss of the grace period, and being subjected to interest at a penalty rate.
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Credit Score Impact:
- Falling behind by at least 30 days on credit card payments can lead to a drop in your credit score. A past-due status is reported to credit bureaus after two missed due dates.
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Account Closure:
- If you persistently neglect payment, your credit card issuer may opt to close your account, though the outstanding balance remains your responsibility.
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Legal Implications:
- Prolonged non-payment may escalate to legal actions. The issuer could sue you for repayment or sell your debt to a collections agency, which may also pursue legal action.
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Minimum Payment Importance:
- Paying at least the minimum required amount by the due date is crucial. It helps maintain a good standing, avoiding late fees, penalty rates, and credit score damage. However, interest is still applicable on the remaining balance.
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Effects of Paying Minimum but Not Full Balance:
- If you pay the minimum but not the full balance, interest accrues at the regular APR, and the grace period is lost, leading to immediate interest on new purchases.
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Escalating Penalties for Non-Payment:
- Beyond a certain threshold of non-payment, penalty APRs can be applied to the entire balance. The credit card company may eventually charge off the debt, signaling a loss for taxes.
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Legal Actions Based on Time:
- The timeline is crucial. If you don't pay for an extended period (3-15 years), you become vulnerable to lawsuits, depending on your state's statute of limitations. Time-barred debt may not be a valid defense until the statute of limitations runs out.
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Potential Garnishment:
- Losing a lawsuit and being ordered to pay may result in wage or bank account garnishment.
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Recovery Strategy:
- The article emphasizes the importance of catching up on missed minimum payments, bringing the account to current status, and eventually paying the full balance to restore the grace period and halt the accrual of new interest.
In conclusion, the article underscores the significance of responsible credit card management, urging readers to prioritize at least the minimum payment to avoid severe financial repercussions. This advice aligns with industry best practices and emphasizes the importance of proactive credit management for a healthy financial future.
