If you're ever in a situation where you can't make your credit card payment, it can be confusing to understand how that may affect your account. Here are 4 things that can happen if you're late making a payment.
1. Your balance could increase—even if you don’t use the card.
The Consumer Financial Protection Bureau, or CFPB, explains that missing a minimum payment can increase your balance in the following ways:
- You may be charged a late fee. "The first time you are late, the credit card company can charge a fee of up to $27. If you are late a second time within the next 6 billing cycles…the credit card company can generally charge up to $38.
- You may continue to be charged interest on your unpaid balance. “Once a card issuer begins to charge interest it will continue to do so until it receives your payment [in full].
- Your interest rate could go up. “A card issuer can increase the interest on existing balances only if you are at least 60 days late in paying your required minimum balances.” Not all issuers change interest rates with late payments, and some exceptions apply, so it is best to check with your credit card company.
2. Late payments could show up on your credit report, and may affect your credit score.
As the CFPB describes it, “a credit report is a statement that has information about your credit activity and current credit situation such as loan paying history and the status of you credit accounts. Your credit scores are calculated based on the information on your credit report.”
It isn’t possible to say exactly how a late payment will affect your credit report or how your credit will be viewed by other creditors. The exact impact of how that affects your credit score depends on other factors beyond just a late payment. Be sure to check your credit report so you can monitor your status.
3. Depending on your credit card company’s policies, you may lose use of your card.
If you don’t pay on time, you may not be able to use your card for new purchases until your account is current. Or, you may lose the use of the card for good. Policies on this vary from credit card company to credit card company, so check with your issuer to learn more about what you can expect.
4. Your account may charge off if you fall too far behind.
When a credit card account goes 180 days (a full 6 months) past due, the credit card company must close and charge off the account. This means the account is permanently closed and written off as a loss to the company, although the debt is still owed.
If you’re having trouble making payments, reach out to your credit card company because they might be willing to work with you.