If you don’t pay your credit card bill at all, you will likely get charged a late fee, lose your grace period, and have to pay interest at a penalty rate. Your credit score will also go down if you fall at least 30 days behind on a credit card bill payment. If you continue to not pay, your issuer may close your account, though you’ll still be responsible for the bill.… read full answer
If you don’t pay your credit card bill for a long enough time, your issuer could eventually sue you for repayment or sell your debt to a collections agency (which could then sue you). But it’s not all or nothing with credit card payments. It’s an entirely different story if you simply pay the minimum amount required.
If you always pay at least the minimum required by your due date, your account will remain in good standing and you won’t have to face late fees, penalty rates or credit score damage. You’ll just have to pay interest on the remaining balance at your card’s regular rate.
Here’s what happens if you don’t pay your credit card:
If you pay the minimum required but not the full balance due: Your total unpaid balance will accrue interest at your card’s normal APR. You’ll also lose your grace period, so new purchases will accrue interest right away, too.
If you don’t pay at all: Your account will be reported as past-due to the credit bureaus after two missed due dates. That will hurt your credit score. In addition, a late fee of up to $38 may be tacked onto your balance (but it can’t exceed your minimum payment). Your issuer may also apply a penalty APR to new purchases, though they must inform you 45 days in advance.
If you get 60 days behind on minimum payments: The issuer can apply a penalty APR to your entire existing balance.
If you get 180 days behind on minimum payments: The credit card company will have to charge off your debt (consider it a loss for taxes). But that doesn’t mean they’ll stop trying to get you to pay. They may sell your debt to a collections agency, or they may choose to sue you.
If you don’t pay for 3-15 years: You are vulnerable to a lawsuit, depending on which state you live in. Time-barred debt is not a valid defense until your state’s statute of limitations runs out. If you lose a lawsuit and are ordered to pay, you might have your wages or bank account garnished.
So the bottom line is that you should always try to make at least the minimum payment on your credit card. Sure, you’ll still owe interest, but you won’t have to deal with the other negative consequences of not paying your credit card at all.
If you’ve fallen behind, the most important thing to do is catch up on your missed minimum payments and bring your account back to current status. After that, your goal should be to pay your full balance due for two months straight. Though that’s easier said than done, doing so will restore your grace period and stop the buildup of new interest.
How much you owe can also determine your minimum payment on a 0% APR credit card. The 1% or 2% rate usually applies if you have a sizeable balance, generally $1,000 or more. If your balance is less than the $1,000, you’ll pay a fixed floor rate, usually around $25 for minimum payments. The fixed rate varies by card. If you have a very small balance, less than $25, for example, your minimum payment will be the full balance.
There are other factors that can affect the minimum payment on a 0% APR credit card. If you pay late or exceed your credit limit, for example, your minimum payment will be adjusted. It will include any unpaid minimum payment, amount over the credit limit and related fees. If these occur during the 0% APR period, an issuer may also cancel the 0% interest rate and begin charging the regular APR.
Here is what you should know about the minimum payment on 0% APR credit card:
A minimum credit card payment is the lowest amount you’re obligated to pay each billing cycle in order to keep your account current.
Most major credit card issuers require a minimum payment equal to 1% of the total balance. Discover charges 2%.
When a 0% APR period expires, minimum payments will increase to include any interest charges added to the total balance since your last billing cycle.
You can find your minimum payment on your credit card statement. It is also available on your online account or in the introductory pamphlet included with your new card. You can also call customer service at the number on the back of your card to inquire.
Minimum payments can be determined by how much you owe. The 1% - 2% rate usually applies to higher balances ($1,000 and more). A minimum payment floor (usually around $25) often applies to balances less than $1,000.
Usually, if you have a balance of less than $25, the full balance is the minimum payment.
An issuer may also cancel the 0% interest rate and begin charging the regular APR if you pay late, exceed your credit limit or fail to make the minimum payment. Your minimum payment will be adjusted to include any outstanding minimum payment, over limit amounts or any related fees.
Don’t assume that a 0% APR means you don’t have to pay anything at all. You are required to pay the minimum every month; you just won’t owe interest during the 0% period. And you should always try to pay significantly more than the minimum amount due on a 0% APR credit card. You want to pay off the entire debt before the introductory rate expires and the regular APR kicks in. Any missed payments or payments less than the minimum amount will likely lead to the 0% APR being cancelled.
If you’re transferring a balance or financing a big purchase, divide the balance by the number of months the 0% promotion lasts. This will help you get a rough estimate of how much you should pay each month. Better still, divide the balance by one less month than you have on your promotion to make absolutely sure no balance remains at the end.
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