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 take a hit. If you continue to not pay, your issuer may close your account, though you’ll still be responsible for the bill. They could eventually sue you for repayment, too, 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 don’t pay the full balance due but manage the minimum amount required. If you pay the minimum by your due date, you’ll get credit for paying on time and won’t have to face late fees, penalty rates or credit score damage. You’ll just have to pay interest on your 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, and the damage will get worse the further behind you get. A late fee of up to $38 may be tacked onto your balance, too. But the fee 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. They can apply the penalty APR to your entire balance if you become more than 60 days delinquent.
If you get 180 days behind on minimum payments, the credit card company will have to charge off your debt (consider it a loss). 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 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 sounds easier than it is, doing so will restore your grace period and stop the buildup of new interest.