What Happens if You Stop Paying Your Credit Cards?

Sometimes you need to put some bills on the back burner. It can happen to most anyone. Maybe your family went through a medical emergency. Maybe your income dropped, or rising prices put you in a tight spot. 

When that happens, your best option may be deciding which bills to prioritize. You probably shouldn’t stop paying your mortgage or rent. And certain expenses are a necessity, like food and utilities. 

Not paying your credit cards isn’t ideal, but you might decide it’s the way to go while you get back on your feet. If you need to consider this, here’s what to expect.

What Happens When You Stop Paying Your Credit Cards

The results of not paying your credit cards can start small, but they tend to get worse the longer you go. Here’s a timeline of what could happen at each stage.

The first 30 days

When you miss a credit card payment, issuers usually charge a late fee. Legally, issuers can charge up to $30 for the first late fee. If you miss another payment within six billing cycles, they can charge you up to $41.

Card issuers will usually waive your first late fee if you ask. But you need to catch up first, by making at least the minimum payment.

People are often worried about their credit scores when they miss a credit card payment. Late card payments don’t affect your credit right away—creditors can only report payments that are at least 30 days past due. If you get caught up before they report, you should keep your credit intact.

30-90 days past due

Once your credit card hits 30 days past due, there are more serious results. The issuer can report your card as 30 days late on your credit file. Your payment history is the most important part of your credit, and even a single late payment could drop your credit score—sometimes by a lot.

The damage to your credit increases each month you don’t make your payment. Being 90 days late is worse than 60 days, which is worse than 30 days late. Your issuer could also charge additional late fees if you miss multiple payments.

Issuers may apply a penalty APR, normally starting when your payment is 60 days late. A penalty APR is a higher interest rate charged for not fulfilling the terms of your cardholder agreement. Penalty rates are generally up to 29.99%, so they can make credit card debt even more expensive.

120-180 days past due

Card issuers eventually charge off unpaid credit card accounts. A charge-off is when the issuer closes the account and writes off the debt as a loss. The usual time frame for a charge-off is 120 to 180 days.

You may be contacted by outside debt collectors at this point. Card issuers often sell unpaid debt to collection agencies. The original card issuer or a debt collection agency could also take legal action against you.

What to Do if You Can’t Pay Your Credit Card Bill

If you can’t make your credit card payment, you do have options. What’s most important is being proactive so you can find a solution that works for you. Here are a few options to consider.

Ask about hardship programs

Your card issuer might work with you if you’re going through financial difficulties. Many card issuers offer hardship programs for debt for their customers in this situation. If you’re approved for a hardship program, the issuer may temporarily reduce your monthly payments, lower the interest rate on your card, or offer another form of assistance.

If possible, contact your card issuer before you miss any payments. You may have a better chance of success if your account is still in good standing when you call. 

Be prepared to explain why you can’t pay your credit card bill, and provide proof of your financial hardship. For example, if you’re dealing with unexpected medical expenses, you could send the bills as evidence. You should also have a plan for getting back on track, since hardship programs are only temporary.

Enroll in a debt management plan

A debt management plan (DMP) is a service offered by nonprofit credit counseling organizations. First, a credit counselor goes over your finances to see if a DMP is a good fit for you. If so, the credit counselor may be able to negotiate a payment plan with your creditors.

You make one monthly payment—to the credit counseling agency, rather than your creditors—after you enroll in a DMP. Your credit counselor then distributes the payment to your creditors. DMPs often last three to five years.

Enroll in a debt relief program

For overwhelming amounts of debt, a debt relief program may be a good solution. You work with a debt relief company that evaluates your debt, income, and expenses. Based on your financial information, the company comes up with a monthly deposit for you to make in a dedicated debt settlement account you control.

Once you’ve set enough money aside, the debt relief company negotiates settlement offers with your creditors. You could settle your debt for less than what you owe, and get rid of your debt much sooner than you would have by making minimum payments.

A debt relief program probably isn’t necessary if you’re steadily paying down your debt, or if your financial issues are temporary. But if you’re unsure whether you can pay back what you owe, debt relief could provide a way out.