Paying your credit card bill on time is important for maintaining good credit, but you might not realize how vital paying bills on time is. So, for example, if you’re tight on money, it might be tempting to avoid paying your credit card bill until later, but you could hurt yourself a lot in the long run. These are some of the biggest consequences of failing to pay your credit card bills on time.
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A Lowered Credit Score
One of the most significant consequences of failing to pay the minimum on your credit card bill is that your credit will take a hit. You should also know that the longer you wait, the more it will hurt your credit. So if you’re only a week late, make the payment now instead of waiting another few weeks. If you’re less than 30 days late, it’s unlikely to impact your credit score. But being 60 days late will hurt you even more than 30 days late.
So really, according to SoFi, your best bet is to pay off the minimum payment before your credit card payment due date. SoFi says that “you can make your credit card payments before the due date, typically both online and by phone, and doing so can help ensure the payment has time to post to your account before the cutoff.”
Higher Interest Rates and Late Fees
You could also see your interest rate, and some credit card companies will issue a late fee. This depends on the issuer of your credit card and the terms that were set out when you signed up for the card. So check your terms of service.
Deactivation of Account
If you wait too long, typically 180 days, it’s likely that your account will be deactivated. However, you will likely find that your debt has been sent to collections. This will cause your credit score to plummet, and the penalties can escalate if you don’t pay the collections agency.
When you don’t pay the collections company, you could find a lawsuit letter in your mail. If you still don’t pay the bill, some companies might try to recoup their loss by placing a lien on your property or even tapping into your bank account for the payments. They might also seek to take your belongings to get back their losses, although it’s unlikely they’ll come for household items because they’re not worth much. However, they might try to take something more valuable, such as your car.
What You Should Do When You Can’t Pay Your Minimum
If you’re at a point when you can’t pay your bills, know that taking even small actions now can help you avoid much more significant consequences later. For instance, if you can’t make your minimum payments, stop using that credit card. You should also call your card issuer. Even though this sounds scary, it’s in your best interest because they might have a hardship program that will temporarily lower interest rates and waive late penalties. You can also consider strategies that will allow you to get out of debt, such as consolidating your debt.
Don’t wait if you’re experiencing financial hardship because the consequences of failing to pay a credit card bill only rack up the longer that you wait.