Missed credit card payments can happen so easily. You get busy, forget a due date, or overspend your limit. No big deal — you will just pay it next month, right? Credit cards are an incredible modern convenience, but the consequences of not paying your bill are far more severe than many realise.
In this article, we will understand the repercussions of not missing your credit card payments and how it impacts your financial health. We will also explore some practical tips to avoid missing your card payments so you can proactively and efficiently manage your commitments.
Consequences of missing credit card payments
Wondering ‘what happens if I do not pay credit card bills?’ Missing credit card payments triggers a domino effect of financial burdens.
Initially, you will be hit with late fees that continue accumulating, making the balance harder to pay off. Interest charges also keep accruing on the unpaid balance, increasing what you owe.
Your credit score will take a major hit too. A lower credit score makes you appear less trustworthy to lenders, making them less likely to approve your credit applications. Missed payments that turn into a default create long-term consequences. A default remains on your report for seven years, damaging your ability to get loans or credit in the future at decent rates.
If you continue to miss payments, the credit card company may assign collection agencies to recover the debt, leading to stressful harassment. In extreme cases of prolonged nonpayment, the company may file a lawsuit against you, resulting in wage garnishment or property liens.
A few late payments can spiral into a tremendous financial hole, so it is critical to avoid missed billing dates whenever possible.
Miss a credit card payment? Here is what you can do
If you do miss a credit card payment, do not panic. Take proactive steps to minimise the damage.
Contact your credit card company as soon as possible to discuss your situation. You may be able to negotiate getting a grace period, waiving late fees, creating a payment plan, or lowering interest rates.
Try to pay off the missed payment as soon as possible to lessen the damage to your credit score. Make at least the minimum payment, even if you can’t pay off the entire amount due. Keep in mind that the late payment fees will accrue on your balance, increasing the amount owed.
Consider balance transfer options to pay off the debt faster at a lower interest rate. You can also request your credit card company to convert the balance into fixed EMIs to simplify payments. Tighten your budget temporarily, cutting discretionary spending to free up cash for payments. As a last resort, debt management programs or consolidation loans could help get repaying under control.
The key is to not let the missed payment discourage you, but rather motivate you to take decisive action. With diligence and discipline, you can remedy the situation and avoid long-term credit damage.
How often do lenders report to the credit bureaus?
Lenders are required to report to all four credit information bureaus in India and keep them updated on the repayment behaviours of consumers. The frequency of reporting may vary, with some reporting monthly and others reporting quarterly. It is always advisable to check with the specific lenders with whom you are transacting to understand their reporting practices.
