Charge card vs. credit card: What is the difference?

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.

To negotiate credit card debt successfully, start by figuring out how much you owe and how much you can pay, then come up with a plan of what to ask for, and trade offers with your creditor until you come to an agreement. Learning as much as possible about how to negotiate credit card debt ahead of time is the best way to increase your chances of coming out on top. There are just a few simple steps to follow.… read full answer

Here’s how to negotiate credit card debt:

1. Figure out how much you owe. You should have a clear sense of what debts you have and to whom you owe them.
2. Determine how much you can reasonably pay. Think about this in terms of both a lump sum and monthly payments. Also, figure out what it would take to bring your account(s) back to good standing.
3. Research other people’s experiences. That will give you an idea of what has and has not worked with your creditor. Make a list of successful methods that you can apply yourself.
4. Come up with a plan for negotiation. Make sure you have both an initial offer (your best outcome) and a final offer that you’re not willing to go beyond. Do a bit of rehearsing, playing out various scenarios so you’re prepared for any questions and counteroffers.
5. Contact your credit card’s issuer. Explain why you’re finding it difficult to make payments, emphasizing any factors out of your control, like the loss of a job or sudden medical bills. Express your desire to pay what you owe, just with a little flexibility. If a debt collection company sent your last bill, contact them instead.
6. Present your offer. Explain why it’s mutually beneficial. Listen to their counteroffers, if any. Always be polite, as friendliness can go a long way in negotiations.
7. Get an agreement in writing. If you can come to a compromise, make sure your issuer sends you a written statement agreeing on the new terms.

Every person’s situation is different, so it’s hard to give specific tips on the ideal solution for you without knowing how much debt you have and what’s preventing you from paying it. But as long as you make a well-thought-out plan and communicate with your creditor, your chances of success will definitely improve.

It’s important to note that if you’re dealing with an old debt, or there’s any doubt about the accuracy of your balance, be careful not to admit that you owe the amount in question or to make any new promise to pay. Doing either could reset the statute of limitations, giving the debt collector a better chance of suing you and winning.