What happens if I don’t pay my credit card bills? - Macleans.ca

What happens if I don’t pay my credit card bills?

I know I’m supposed to pay my credit card bills, but I’m wondering: what happens if I don’t?


Although you might think that it is an easy oversight to miss a credit card payment, the repercussions will be with you for years. Credit cards can hold nasty surprises including interest rate hikes and worse if you miss a payment, so you need to put together whatever resources you can to pay your monthly bill- even if you can only make the minimum payment.

It goes without saying that paying the minimum payment is an option in only one situation- that is if the alternative is not paying anything. In either case, if you find that one of these options is necessary than you need to need to think seriously about whether you can afford your lifestyle.

There are four stages of woe if you default on your credit card bills:

1. Your card issuer will inform the credit bureaus and your rating will be reduced, making it much harder and/or more expensive to get credit in the future. This default will be on your credit record for the next 6 years.

2. Many credit card companies have terms that change if you miss a payment- eg. your reasonable introductory rate of 7% could go up to 18% or more.

3. Your card will be put on hold and won’t be able to use it until it is paid off

4. If you have a savings or chequing account at the bank that issued your card, in some cases the card agreement may allow them to take money from your accounts to cover the outstanding credit card bill.

5. If you don’t pay for a long enough period, the bad account will be turned over to a collections agency. At this point, your credit rating will be exceptionally low and you will have long-term repercussions-

The hassle of any of these issues will live with you for years and will have an impact if you need a loan for things like student debt, a car, a wedding, a house or anything else down the road. The consequences are serious- don’t wait to pay it off, and pay it all off every time.

Content provided by InvestorED.ca, an independent non-profit created by the Ontario Securities Commission to help people make effective use of financial information.

Filed under: