What Happens if I Stop Paying My Credit Card?

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If you stop paying your credit card, you can expect late fees, growing interest and a damaged credit score.

If unexpected circumstances—such as unemployment or medical bills—leave you with more debt than you can afford to pay, it may be difficult to stay on top of credit card bills.

It’s a fair question: can credit card companies take serious action if the debt is unsecured?

The consequences may seem small at first, but as more time passes, the effects of not paying your credit card become more serious. They could even affect your future chances of obtaining a job, lease or mortgage. 

Our guide will walk you through what you can expect to face if you stop paying your credit card.

Late Fees and Interest Begin to Accrue

The first time you miss a payment, the credit card company can charge you a late fee of up to $25 under your rights from the Credit Card Accountability Responsibility and Disclosure Act of 2009 (also known as the Credit CARD Act).

The fee is added to your credit card balance and becomes subject to interest charges based on your APR.

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After two missed payments (60 days), your interest will typically increase to the higher penalty APR. The card issuer may not lower the interest rate for six months.

Late fees and finance charges will continue to increase your monthly payment, making it more difficult to catch up.

Collections Efforts from Creditors Increase

Your creditors will begin to contact you in an attempt to get you to pay. They will continue to contact you on a regular basis. The longer your debt is unpaid, the more frequently you’ll hear from their billing departments.

Under the Fair Debt Collection Practices Act from the FTC, debt collectors must abide by laws pertaining to communication with consumers. For instance, they are not allowed to call at unusual hours. Consumers have the right to request the debt collector to stop contacting them. However, these laws only apply to debt collectors and not your original creditors. 

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Credit Score Drops

If you miss a payment by 30 days, expect the creditor will report it to the three major credit bureaus: Equifax, Experian and TransUnion. Since payment history determines 35 percent of your credit score, this means your credit score will drop. If the account goes to collections, it’s considered a serious delinquency.

A low credit score will make it difficult to obtain a credit card, loan, or even a job in the future. It will also decrease your ability to get approved for a lease or mortgage.

Account May Go to Collections

Once you’ve reached 180 days late, the creditor will typically charge off the debt and sell it to a collections agency. The term “charged off” doesn’t mean the debt will go away. Not only are you still responsible for the amount owed, but additional fees and interest may be added to your balance.

Charge offs can remain on your credit report for seven years. However, the original creditor or debt collector can sue you for the debt before the statute of limitations expires.

When Do the Creditors Report a Payment Missed or Late?

FICO® scores consider the details of a missed payment, such as how late it was. Creditors typically report late payments at certain periods of time:

  • Late by 30 to 59 days
  • Late by 60 to 89 days
  • Late by 90 to 119 days
  • Late by 120 to 149 days
  • Late by 150 to 179 days
  • Late by 180 or more days

Can I Go to Jail for Not Paying My Credit Cards?

There is no debtors’ prison in the United States, but if a creditor sues you in a court of law and wins a judgement, they may be able to garnish your wages or file a lien on your property.

What Happens to Credit Card Debt If I Move Out of the Country?

Your creditors may still send you to collections or file a lawsuit against you if you have debt after moving abroad. Creditors can go after any assets you leave behind in a checking, savings or investment account. If you continue working for an employer based in the U.S., your wages could be garnished.

If you move abroad, you will continue to accrue penalties and significant damage to your credit score, which could be problematic if you ever decide to return to the United States.

What Happens to Credit Card Debt When I Die?

Credit card debts do not disappear when you die. The credit card issuer will be notified and late fees will no longer be assessed. The executor of your estate will use assets—such as your car, home or bank accounts—to pay off your credit card debts. The debt may transfer to a spouse or other family member if they co-signed for the credit card or live in a community property state.

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Keeping up With Your Credit Card Payments

One of the most important factors in your credit score is whether or not your payments have been made on time. Late or missed credit card payments can lower your score, preventing you from obtaining loans or credit cards with better terms and lower interest rates.

If you notice an inaccurate late payment on your credit report, our credit repair services can help you remove negative items and work to improve your credit score.