This is what happens when you miss credit card payments

credit cards

As of March 2018, the total consumer debt in America already reached $1.027 trillion and this number is on track to reach $4 trillion by the end of the year.

According to the Federal Reserve, 43% of Americans spend more than they receive each month and make up for it by using credit cards and borrowing money. This is why credit card debt is increasing at an alarming rate, and more Americans are drowning in it.

One of the reasons for ballooning credit card debt is missed payment. In a survey, 33% of Americans said they missed payments because they used up the money to pay for other needs, 32% said they had an unplanned expense and 35% said they simply forgot to make a payment. But what really happens when you miss credit card payments?

You will start getting calls and emails from your bank

Banks are aware that clients may miss payments due to different reasons. In fact, 21% of Americans surveyed said they’ve been delinquent with payment at some point in their life. But when you start missing your credit card payments without informing them, they will start to reach out to you. If you are 30 days late, your bank will either send an email or call you to clarify the reason you missed your payment.

Financial experts say that avoiding these calls or emails will not do any good, so make sure to read or answer them and respond accordingly. If you show willingness to work with your creditor, they might give you some leniency in making up for your missed payments.

You will be charged a late fee

Whether you didn’t make any payment or you paid less than the required amount, the bank will mark it as a missed payment and charge you with a late fee of $25 to $35. The worst part is, this late fee will be automatically added to your outstanding balance, which means that it will also start accumulating interest.

As if this late fee isn’t enough, your creditor will also charge you a penalty APR that could reach as high as 29.99% if you miss payment for more than 60 days. This penalty can last for up to six months and may only be lowered by the credit card company after reviewing your account. If you don’t want to drown deeper in debt, this is the best time to start finding ways to repay your credit card, one of which is to apply for a debt consolidation loan. Visit to learn more about this option.

Your interest rates will begin to balloon

If that late fee is already making you nervous, wait until you see how much interest rates can balloon due to missed payments. Some creditors will offer a special interest rate once you apply for a credit card, but that could be removed if you missed a payment. If you have a 15% interest rate, it could go as high as 10% more, which could balloon to a painfully high amount if added to your balance. There is the option to switch to a lower interest card, but that would still depend on your credit rating.

Your credit report will be tarnished

You know the importance of maintaining a good credit score and how a bad rating can affect your ability to apply for loans in the future. One missed payment may not affect your rating just yet, but continuous delinquency may prompt your creditor to report you to three major credit bureaus: TransUnion, Equifax and Experian. These agencies keep a record of your credit score and manage your credit report, and these information are used by lenders to decide if they should lend you money or not.

So, what exactly happens to your credit score if you miss a payment? Most lenders will wait for 60 days before reporting you to the credit bureaus, but experts say that whether you have a good or bad credit score, a late payment of 30-60 days will usually decrease your score by up to 110 points.

At the end of the day, it’s all about being responsible enough to make payments on time. And if you can’t be proactive and let your creditor know that you can’t pay and what your reasons are. They will appreciate you letting them know and will even work with you in protecting yourself against further debt.