When you can’t pay a credit card, it can come with consequences such as late fees, increased interest and a potentially negative impact on your credit score.
If you believe you’re in a situation in which you can’t pay a credit card, one option is to contact your credit issuer first. They may be able to advise you on a payment plan or provide other resources. If you do miss a payment, below are a few things to expect.
Impact of a Missed Credit Card Payment
Late Fees and Penalty APRs
When you don’t make the minimum payment by the payment due date, the first thing you will see is a late fee on your account in the form of either a percentage of your balance, or a fixed dollar amount of up to $37. Your interest rate may increase after a missed payment, as well.
Reduced Credit Score
Missing a credit card payment can lower your credit score. Issuers generally submit account notices every month to the major national credit bureaus. Payment history is an important component of your credit score, and is therefore a critical thing to consider if you want to maintain or improve your credit score.
Generally, if you don’t make a monthly payment for six consecutive billing cycles, it may result in a charge-off. This would be reflected in your credit report and will usually remain on the report for about seven years. At this point, and sometimes even earlier, your account may be placed with a collection agency or attorney, which means the collection activity on your debt will be from the collection agency or attorney and not from the issuer.
What Can You Do about a Missed Payment?
You should submit your payment as soon as possible to try to minimize any impact to your credit score.
If you can’t pay your credit card, one of the best things to do is call your card issuer and explain the situation. Maybe you’re facing a difficult financial situation, such as a job layoff or some unexpected medical expenses. Whatever it is, let your issuer know and they might be able to work with you on a repayment plan or offer other assistance.