When you use a credit card, it’s with the understanding between you and the credit card issuer that you will make regular payments to pay it off. You don’t have to pay off the full balance each month (although that is a smart strategy), but you must at least make the minimum payment by its due date. If you stop paying your credit card bills, consequences may follow. Those consequences can multiply and intensify the longer you go without making payments.

Following are some common penalties and risks you may face if you miss credit card payments. Be sure to read your credit card terms and conditions closely to understand your specific circumstances. 

Late fees. If your monthly payment is not received by its due date, you may be charged a late fee of up to $29 for the first month you’re late, and up to $40 a month thereafter (these maximums are set by the Consumer Financial Protection Bureau). These fees can really add to your debt, especially because if you don’t pay them outright, they become subject to interest charges along with the rest of your outstanding balance.

Damage to your credit report and score. Once your payment is at least 30 days past due, the credit card issuer can report your delinquency to the three credit bureaus: Equifax, Experian and TransUnion. Your late payment will be noted in your credit report, where it may remain for up to seven years. A late payment can also knock points off your credit score — potentially 50 points or more, as your payment history accounts for 35% of your credit score.

This may negatively affect you if you’re trying to buy a car or a house, for example, and the potential lender checks your credit report and/or score. They rely on this information to determine whether to extend credit to you and, if so, at what interest rate. Consumers with strong credit histories and scores are more likely to be approved for, and/or get favorable rates on, loans. It’s not only lenders who look at your credit, either: A landlord may check your credit to assess whether to rent to you, and a phone service provider may check before engaging in a service contract with you.

A higher annual percentage rate (APR). If you are late with a credit card payment, any promotional interest rate that may have been applied to your account will be discontinued, and you will be charged the standard APR established for your account. Should your payment become 60 days late, the card issuer may apply an even higher rate of interest (up to 29.99%), called a penalty APR, to your outstanding balance as well as future purchases. Fortunately, after six months of on-time payments, the issuer is required to lower your APR back to its regular rate for your current balance; however, it is at the issuer’s discretion as to whether to lift the penalty APR on future purchases. 

Collection calls. Once your delinquency becomes severe (180 days late), it enters default status. The card issuer may close your account due to nonpayment and sell your outstanding debt to a collection agency. This charge-off is reported to the credit bureaus, where it can cause serious damage to your credit. You remain responsible for the debt, and collectors will reach out to you to see how you plan to resolve the debt.

At this late stage, your choices are to pay off the debt in full, either through a single payment or a payment program you negotiate with the collection agency; try to settle the debt with the collector for less than you owe; claim bankruptcy or work out a debt management plan with the support of a nonprofit credit counseling agency. (The National Foundation for Credit Counseling and the Financial Counseling Association of America offer resources.) 

Legal action. The card issuer or collection agency may take you to court for your unpaid debt. If the court rules in their favor, they may be able to take funds from your bank account or your paycheck, or to place a lien on your property, to pay off your debt.

How to Lessen the Consequences of Credit Card Delinquency

If you know that you are going to miss a credit card payment, or if your payments have become unmanageable, you can try negotiating with the credit card company. If you have a solid track record of paying your bills, the company might work with you to reduce your penalties, set up a hardship payment plan or even allow you to skip a payment. Card issuers are not under obligation to negotiate in this way, but many do, so try giving them a call to explain your circumstances and see if they can offer a mutually agreeable solution.

Going forward, you can take steps to mitigate any damage done by past payment issues and to avoid late, missed or unmanageable payments in the future: 

  • Get back on track with on-time payments. It may help to set up autopay for your credit card and other monthly payments.
  • Be careful not to overextend your credit. Live by a budget and spend only what you can afford to pay back.
  • Understand and strengthen your credit score.

Credit cards may be convenient, but it’s important to respect the terms and conditions that come along with them. Keeping payments up to date is an important part of managing your credit and overall finances.