myFICO: What Happens When You Don’t Pay Your Credit Card Bill by the Due Date?

Most people have good intentions of paying their credit card bill on time each month by the due date. Yet sometimes due to oversights or financial hardships, certain consumers may find themselves in the unfortunate situation where their credit card payment is late. In 2022, a little over 2% of credit cardholders were delinquent on their credit card accounts according to Experian data.

If the due date on your credit card bill comes and goes and you fail to make a payment, you could face unpleasant consequences. And as more days pass, those consequences may become more severe. However, if you’re able to act quickly after missing a credit card payment, you may be able to minimize the damage and potentially protect your FICO^® Scores in the process.

Here's a look at what could happen behind the scenes when you don’t pay your credit card by the due date, from myFICO.

For more loan and credit education, visit myFICO’s blog at https://www.myfico.com/credit-education/blog

Late Payment Fees

When you miss your credit card due date, even by a single day, most credit card issuers will charge you a late fee. The cost of this fee may vary based on the terms of your credit card agreement. However, credit card issuers are allowed to charge up to $30 the first time you miss a payment and up to $41 for repeat late payments thereafter.

APR Penalties

You could also face a penalty APR when you fall behind on your credit card payment. Such penalties could make any balances you carry on your credit card account more expensive.

• Penalty APR: If you miss two payments on your credit card, falling at least 60 days behind on your due date, your credit card issuer could opt to increase the annual percentage rate (APR) on your account to the default interest rate or penalty APR. This type of interest rate hike can apply not just to new purchases, but to your existing credit card balance too.
  
  
  
  Penalty APR rates may vary like late fees. As a result, credit card issuers must disclose them in their credit card agreements. It’s not unusual for penalty APR rates to be as high as 29.99%. So, as a cardholder, it’s in your best financial interest to try to avoid triggering this consequence if at all possible.

• Loss of Promotional APRs: A promotional 0% or low APR can be a great potential way to save money on balance transfers or new purchases for a limited period of time. But be sure to read the fine print. Many (if not most) promotional APR offers have terms and conditions stating that if you fall behind on your payment, you could lose your discounted interest rate before its expiration date.

Credit Problems

Missing the due date on your credit card by a single day isn’t going to wreck your credit report or FICO^® Scores. However, it could set you off on a dangerous path if you’re not able to bring the account current quickly.

Once you fall at least 30 days behind on your due date, your credit card issuer may opt to report you as late to the credit bureaus—Equifax, TransUnion, and Experian. At that point, late payments may appear on any (or all) of your three credit reports and can impact your FICO^® Scores in a meaningful way. In fact, payment history is worth 35% of your FICO Score and is one of the most significant factors in its calculation.

If you continue to fall further behind on your credit card bill (e.g., 60-days late, 90-days late, etc.), your credit card company might eventually decide to sell your account to a third-party debt collector as well. From there, a collection account could also show up on your credit reports in addition to the original, delinquent (or charged off) credit card account. A collection account could cause even more damage to your credit history and FICO^® Scores.

Unfortunately, any of the negative items above have the potential to remain on your credit reports and impact your FICO^® Scores for a considerable amount of time. Per the Fair Credit Reporting Act (FCRA), here’s how long these derogatory items can stay on your credit report.

• Late Payments: 7 Years
• Collections: 7 Years (Starting with the date of first delinquency on the original account)
• Charge-Off: 7 Years

On a positive note, as negative items grow older, they will have less impact on your FICO^® Scores. A late payment that is 6 years old, for example, should affect your score less than a late payment that occurred 6 months ago.

Tips for Avoiding Late Payments

The best way to protect your FICO^® Scores, your credit history, and your finances is to pay your credit card on time (and in full) every month. Below are a few tips that could make it easier to accomplish that goal.

• Schedule automatic payments. Consider setting up an automatic draft, at least for the minimum payment on all your credit card accounts. Doing so could help protect you from late payments that occur due to accidental oversights. If you can afford to schedule automatic drafts for the full statement balance each billing cycle, even better. Then you shouldn’t have to worry about paying interest charges on your account.

• Track your spending. Overspending can lead to high credit card balances that may become difficult to manage over time (not to mention high credit utilization ratios). But if you track your spending and avoid charging more on your credit cards than you can afford to pay off each month, it’s possible to enjoy the benefits that credit cards have to offer without the struggle of expensive credit card debt.

• Build an emergency fund. Even if you’re great at budgeting, unexpected expenses or changes in your circumstances could make your finances difficult to manage. However, if you can save a solid emergency fund in advance, it might be easier to weather challenging situations when they arise.

If you’re currently struggling with credit card debt, remember that it’s important to take action as soon as possible. You don’t want to ignore the problem and allow it to grow to the point where it becomes unaffordable and out of control. Even small steps in a positive direction could start to move you in a better direction for the future.

About myFICO

Get your FICO^® Score from the people that make the FICO Scores, for free. Plus, free Equifax credit monitoring and a free Equifax credit report every month. No credit card required. For more information, visit https://www.myfico.com/products/fico-free-plan-a

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