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What happens if I don't pay my credit card bill on time?

What happens if I don't pay my credit card bill on time?

While it’s not an ideal situation to be in, missing a credit card bill can happen to the best of us.

Failing to pay your credit card bill will have consequences, and they will only get more severe (and more expensive) as time goes on.

If you’re worried you may not make your next bill payment in time, or if you’re already late, it pays to be prepared.

Before you do anything

Some situations are out of our control, and credit card companies can often understand this. Call a customer service representative from your credit card company and explain to them that you are experiencing financial hardship, and unfortunate circumstances mean you will be unable to pay your next bill on time. They should help you to arrange a new due date, a payment plan or waived late fees.

  1. Late fees

The first thing you can expect when you miss a paymennt is to be hit by a late payment fee. This is a type of fee that the lender will charge you on every statement if you fail to pay the minimum repayment amount on your credit card.

They can reach as high as $35, although some cards do not charge late payment fees.

It’s worth comparing $0 late fee credit cards if you are prone to late payments, or just for peace of mind.

Use our credit card comparison tool to research low or zero late payment fee credit cards.

  1. High interest charged

Another consequence of missing a payment is that your lender could increase your interest rate on your credit card while payment is still outstanding. This means that your balance is now costlier.

Worst of all, if your missed payment impacts your credit score (see point three) future lenders will feel encouraged to charge you a higher interest rate, particularly if you take out a home loan or a personal loan.

  1. Bad credit score


One of the first questions you may be asking yourself is ‘does a late credit card payment affect my credit score?’. Unfortunately, the answer is yes.

If you’ve missed one or more payments and customer service will no longer assist you, expect to have your late payment reported to a credit reporting body, such as Veda.

According to Veda, there are three different ways late payments are recorded and impact your credit score.

  • Late payments – if you make payment more than 14 days past the due date this is recorded on your credit report as a ‘late payment’. This can stay on your credit report for up to two years.

  • Default – if you miss a payment worth more than $150 and it is more than 60 days overdue, this is listed as a default. However, suitable steps should have been taken to collect part or all the outstanding debt, such as sending you written notice. A default remains on your credit report for five years.

  • Serious credit infringement – this occurs when an individual owes debt to a credit provider and has not contacted them for six months or more, despite attempts by the credit provider to contact them. The individual has left, or appears to have left their last known address without paying the debt and without providing the credit their new or forwarding address. This will remain on your credit report for seven years, unless payment is made. In that case, it will revert to a default and stay on the credit report for five years.
  1. Debt collection

After forwarding your debt to a credit reporting body such as Veda, they may forward this to a debt collector to chase. This is not ideal as not only will it negatively impact your credit score, but this will add a lot more stress to your situation.

Australian Securities & Investments Commission (ASIC) provides valuable resources for dealing with debt collectors. For example, there are restrictions on the days, frequency, and platforms that debt collectors can contact you, such as national public holidays, or over social media.

Remember, it is against the law for debt collectors to threaten, intimidate or harass you, or to make false/misleading statements.

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