Here’s What Happens if You Stop Making Credit Card Payments

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If you stop making credit card payments, you will incur added interest costs, late fees, and other consequences. Read on to find out more. 

When you charge purchases on a credit card, you must pay them back. Ideally, you will repay your card balance in full each month. If you can’t do that, you’re still required to make at least a minimum payment on your cards.

If you don’t send the required minimum amount out of your bank account to your card issuer, you can face serious consequences. Here’s what happens if you stop making your credit card payments.

1. Your interest rate could go up

If you stop paying your credit card, you’ll be in violation of your card’s terms of service. This can trigger a penalty APR, which can send your interest rates skyrocketing. In fact, a penalty APR is often around 29.99%.

When your credit card interest rate goes up, you will be charged more on your outstanding balance. Your debt will become even more difficult to eventually pay back. More of each payment will have to go toward reducing your interest rate, and you’ll pay more interest over time.

2. You could get hit with late fees

Credit card companies sometimes charge as much as $41 in late fees when you miss a payment. In some cases, you may be charged this amount when you miss your payment even by just a few hours.

If you are late multiple times, these penalty fees will add up. But even a single late payment can cost a lot. You’ll need to check with your card issuer to find out the exact amount you could end up owing just for being late — on top of your regular balance, of course.

3. You could damage your credit score

When you are 30 or more days late paying your balance, your credit card issuer is typically going to report the missed payment to the credit reporting agencies. A record of late payments is going to reduce your credit score.

In fact, if you previously had good credit and you made just one late payment, your score could drop by as much as 110 points, even if you are only 30 days late. The impact will be even worse if you keep missing payments or your missed payments become 60 days behind, 90 days behind, or more.

READ MORE: How Does a Late Payment Affect My Credit Score?

4. Your account could go to collections

Finally, you could find yourself with an account that is in collections. Generally, once you are about 90 to 120 days behind, your card issuer will charge off your account and determine it is no longer likely to recover the money. At this time, you can be sent to collections.

The charged-off account will show up on your credit report, and the debt collectors will now take steps to try to cover the unpaid balance due. This could include having debt collectors contacting you, or even potentially filing a lawsuit against you.

If you are sued and you lose, you’ll get a judgment against you that could be enforced by the court by putting a lien on your property or garnishing your wages.

These are all serious consequences, so try to make at least the minimum payments on your credit cards or look into options such as a balance transfer or loan refinance that could make payments more affordable. If you can’t do that, reach out to your creditors to find out what your options are. There may be a better solution than just stopping payments and dealing with the damage.

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