What Happens When You Don't Pay Your Credit Card Bill

Pay your bill in full, on time, every month. It’s the advice every credit card holder receives from almost every source (with the usual caveat that if you can’t pay off the full balance, please, for the love of God, at least pay the minimum due). But what if you just … don’t? Roughly 1 in 20 Americans is past due on a credit card bill, according to an Urban Institute report.

If you’re in that pool of tardy payers, know that paying one day late and one month late have very different consequences. Sean McQuay, a credit card expert for NerdWallet, helps us trace the journey from merely being late to tanking your credit.

1 DAY LATE

“Most people think that late payments are immediately reported to credit agencies, but that’s not true,” says McQuay. “Consumers are protected by a number of federal mandates that a late payment can’t impact your credit score until you’re at least 30 days past the due date.”

Don’t celebrate that small victory too hard, though. Even one day late and you’ll get hit with a late fee, typically to the tune of $35 to $40. If your card has any sort of low introductory interest rate, be prepared to kiss that good-bye as well.

30 DAYS LATE

Though it varies a bit from bank to bank, most card issuers will report you as delinquent to the major credit reporting agencies after 30 days. That black mark will stay on your report for seven years—and be tsk tsked over by every future potential lender that reviews it. Your credit score will also take a tumble, though how much depends on how high your score was to start.

“If you have excellent credit, of 700-plus, and you’re late by 30 days, you’ll probably lose 100 points off your score,” says McQuay. “That’s substantial—even a 20-point difference can have a huge impact on what kind of interest you’ll pay on a car loan or mortgage.” Miss your payment by this much, and you’ll probably have to fork over any points or miles in the card’s reward program (most require your account be in good standing).

2 MONTHS LATE

Credit card companies will ditch your old interest rate and apply a Penalty APR that can be as high as 29.99 percent. “That surprises people, because most don’t read the terms and conditions of the card when they sign up,” says McQuay.

You’re typically stuck with that jacked-up rate, even once you resume payments. The CARD Act of 2009 requires card issuers to reconsider a Penalty APR only after six consecutive on-time payments. Another thing that happens if you hit the two-month mark: Your delinquency is reported to credit agencies again, though subsequent missed payments aren’t likely to lower your score as much as the initial missed month.

3 MONTHS LATE

Somewhere between three and four months, most credit card issuers will “charge off” your debt. That means they sell the outstanding loan—for pennies on the dollar—to a debt collection agency. Both the charge off and sale will be noted to credit agencies and, yup, they’ll stick around on your credit report for seven years.

You’ll also likely start to receive phone calls and mail from the collection agency, though there are laws around how much they can harass you for payment. “It’s up to the collection agency to decide how long they pursue you for the debt,” says McQuay. “If the charge off is for $100, they might give up sooner than if it was $10,000.”