What happens if you don’t pay your credit card? Credit card debt can be suffocating, especially when your finances are stretched too thin. Making the minimum monthly payment may seem impossible, opening the door to missing a payment.
Unfortunately, this can cause late fees, higher rates, damage to your credit, and more. Now is not the time to stay idle. Gaining control of your finances is possible with a wise course of action.
What happens if you stop paying off credit cards?
Life gets busy and you may forget to pay your credit card. Missing it by a few days is typically harmless, aside from a late fee or loss of promotional offers on your account.
If it’s a one-time occurrence, the issuing bank may waive the fee if you call and ask. Even with a fee, you should experience minimal impact on your credit score.
However, if a few days turn into more than 30 days, the situation could worsen. “If you miss a payment by 30 days or more, that missed payment will show up on your credit,” says debt and bankruptcy attorney, Ashley Morgan of Ashley F. Morgan Law. “The first missed payment is usually the biggest hit to your credit of sometimes up to 100 points.” Missing payments for 60 or 90 days exacerbates the situation.
It’s safe to expect communication from the bank once payment is late. Communication increases the longer you miss payments and, ultimately, you may hear from a debt collection agency once you’ve missed payments for 90 days.
Things to do if you can’t pay your credit card bill
Life happens, but there are options if you can’t pay your credit card bill. It’s best to use one or more of these steps to help get back on track.
1. Call the issuing bank
Ignoring the situation often seems like a good choice, but that commonly worsens the situation as the bank can’t help if they don’t understand the circumstances.
Instead, call the bank and explain the issue. The bank may have a hardship program or even allow you to change your due date if it’s a one-time situation. Regardless of the issue, clearly communicate what’s happening, how much you can afford to pay, and when you expect things to return to normal. This can all help the bank work with you to create a workable plan.
2. Get a balance transfer card
Does your credit card have an exorbitant interest rate that’s making payments burdensome? If that’s your case, considering a balance transfer credit card may be a good solution.
Depending on the card, you could receive a 0% interest rate for up to 21 months. This lets you eliminate interest and focus payments on the principle of the debt.
Just make sure you don’t miss payments, as you may face a penalty APR and loss of the promotional rate. Moreover, many cards retroactively charge interest if you don’t pay off the card in full by the end of the promo period.
3. Take an honest look at your finances
Determining what are the consequences of not paying credit card debt depends on the situation. Is it a short or long-term problem? Regardless of which it is, it’s best to stop using your card to avoid worsening the situation and then focus on how to make the minimum payment.
Then, it’s time to honestly review your finances. “If you cannot make a minimum payment on your account, you need to look at your finances. Take a look at your income and your expenses. It is important to determine if this a one-time issue or can you no longer afford to make payments at all,” says Morgan.
You don’t need to solve it all at once, but it’s wise to determine how to get your head above water. This can help provide the stability necessary to create a simple budget.
4. Make at least your minimum payment
Missing payments is stressful. If you’re unable to pay off the full balance, do what you can to make the minimum payment.
The bank will still charge you interest, but you will avoid fees and penalties. Making the minimum payment shows the bank you’re serious, and it helps keep your payment history stable, which is important for your credit score.
5. Consider credit counseling
Credit counseling can be helpful, given the right circumstances. If you’re at risk of declaring bankruptcy, counseling may be a suitable choice. Due diligence is necessary to avoid shady companies that charge onerous fees or ones that may not provide reliable support.
However, credit counseling isn’t necessary for all. “If your debt is manageable, your income steady, and your credit score is solid, you can probably DIY your debt, says Howard Dvorkin, CPA and chairman of Debt.com. “You can get a personal loan with an interest rate under 10%, then use that money to pay off your credit cards, which average over 20% nationally.”
Credit counseling may be useful, but if you don’t need it, it may cost you more in the long run.
How to pay off credit card debt when you have no money
When you have minimal resources, it’s best to focus on ways to raise enough cash to make the current minimum payment.
Possibilities depend on your situation but consider options such as:
- Identify a bill you can eliminate
- Sell items from around your home
- Find a side hustle that pays weekly
- Return a recent purchase to recoup funds
Pair your choices with an honest look at your finances to create momentum for a longer-term solution.
Should you seek help from a credit counseling service?
Credit counseling can be an excellent resource to help if you’re legitimately at risk of being unable to repay your indebtedness. A reputable service can help you repay your debts, start budgeting, and pursue financial stability if you find that a DIY approach won’t work.
Unfortunately, the space is often rife with shady businesses. Dworkin explains how to weed out bad actors, adding, “Look for a company that’s been around for at least a decade — they probably wouldn’t have lasted that long if they weren’t really helping people….When you call them, see if they offer a free debt analysis with no hard-sell tactics. If all that happens, you’ve found an expert who can really help you.”
You can typically find such options online via the Financial Counseling Association of America or the National Foundation for Credit Counseling.
The bottom line on what happens if you stop paying credit cards
There are various fallouts of not paying your credit card. Some of those outcomes can be somewhat problematic. It’s best to actively work to make the minimum payment and then create a plan to eliminate indebtedness for good. Tackle the situation head-on and use available resources to amplify your efforts.
