Missing a credit card payment can have significant consequences, but understanding the potential impacts can help you avoid or manage the situation. Here’s what happens when you miss a payment in 2025.
Late Fees and Penalties
The most immediate effect of missing a credit card payment is the late fee. Most credit card issuers charge a fee of $25 to $40 for late payments. This fee can increase if you continue to miss payments. Additionally, if the payment is significantly overdue, the penalty APR may kick in, which can raise your interest rate to a much higher level, sometimes even over 29%.
These fees and higher interest rates can quickly escalate your debt, making it harder to manage payments in the future. To avoid these penalties, always try to make at least the minimum payment by the due date.
Increased Interest Charges
When you miss a payment, your credit card balance accrues more interest. Most credit cards come with a high interest rate, and a missed payment can cause that rate to increase, depending on your card issuer’s policies. If your interest rate rises due to a missed payment, your outstanding balance can grow much faster, especially if you have a high balance to begin with.
For example, if you miss one payment, your interest could jump, and any new purchases you make could be charged at a higher rate, increasing the cost of your debt.
Impact on Your Credit Score
One of the most serious consequences of missing a payment is the impact on your credit score. Credit card issuers report missed payments to the credit bureaus (Experian, Equifax, and TransUnion), and a missed payment of 30 days or more can cause a significant drop in your credit score. A lower credit score could impact your ability to qualify for loans, mortgages, or even a new credit card, and it could also lead to higher interest rates.
The more frequently you miss payments, the worse the impact on your credit score. If you are already behind on other accounts, this will compound the effect, making it even harder to recover your credit rating.
Loss of Rewards and Benefits
Many rewards credit cards offer cashback, travel points, or other benefits. However, missing a payment could result in losing your rewards. Some credit card companies freeze your rewards until your account is back in good standing, while others might completely cancel your earned rewards.
If you use a rewards credit card, keep track of your due dates and payments to ensure you don’t lose the perks you’ve worked hard to accumulate.
Risk of Account Closure
Repeated missed payments can also lead to your credit card account being closed. If you miss multiple payments, your card issuer may close your account, and this will be reported to the credit bureaus. A closed account can negatively affect your credit score, as it increases your credit utilization ratio. This ratio reflects the amount of available credit you’re using, and a higher ratio can lower your credit score.
A closed account can also impact your ability to qualify for future credit. It’s essential to stay current with your payments to keep your account open and maintain a positive credit history.
Collection Efforts
If you continue to miss payments and accumulate debt, your credit card issuer may send your account to collections. Once in collections, the debt collector will attempt to recover the money you owe. Collection accounts are reported to the credit bureaus, which can significantly lower your credit score.
Worse, if the issue goes unresolved for a long time, the creditor may file a lawsuit to recover the debt. Legal action could result in a court judgment or even wage garnishment, which can have lasting financial consequences.
How to Avoid Missing Payments
To avoid the negative impacts of a missed credit card payment, it’s important to stay organized and aware of your due dates. Setting up payment reminders or automatic payments can help ensure you never miss a payment. Many credit card issuers allow you to set up automatic payments for the minimum payment, full balance, or a custom amount.
Additionally, if you realize you might miss a payment, it’s better to make a partial payment than to skip it entirely. Even paying a small amount can reduce the penalties and interest charges.
Conclusion
Missing a credit card payment can lead to late fees, increased interest rates, and a damaged credit score. To avoid these consequences, always try to make your payments on time, even if it’s just the minimum payment. If you find yourself struggling to make payments, contact your credit card issuer to discuss payment plans or other options to avoid more severe financial repercussions.