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What happens if you are late in paying your credit cards or stop paying them?

Whether due to financial hardship, oversight, or other circumstances, falling behind on credit card payments will trigger a cascade of consequences.

FILE PHOTO: Visa credit and debit cards are seen in this picture illustration taken August 2, 2022. REUTERS/Benoit Tessier/File Photo
Benoit TessierREUTERS

Failing to pay your credit card debt can have serious implications. Late payment fees and increased interest rates are common penalties, making your debt more expensive. Your credit score will be negatively impacted, affecting your ability to obtain credit in the future.

These issues pale in comparison to the ultimate consequence of financial ruin. In effect stealing money from banks will lead to them pulling out all the stops to recover it, including court-issued documents allowing them to seize expensive items, cars, and even your house.

Possible and likely consequences of failing to pay credit card debt

Credit card companies will charge a fee if you miss your payment deadline. This fee can vary depending on your credit card terms and the amount overdue. This will keep expanding until you pay the debt off, making repayments crucial before the debt spirals out of control.

Future debts will be affected by an increase in your interest rates. Credit card companies will raise your interest rate significantly, making your debt more expensive to repay. This is also linked to the harming of your credit score. Your payment history is a crucial factor in determining your creditworthiness, and late payments will lower your credit score, making it harder to obtain credit in the future. Lenders will view you as a higher risk borrower, leading to limited options and higher interest rates for future credit applications.

Consistently failing to make payments could mean the credit card companies could employ collection agencies to recover the debt. These agencies may contact you through letters, phone calls, or even legal action. They may file a lawsuit against you to recover the outstanding debt. If the court rules in their favor, they may be able to garnish your wages or seize your assets to satisfy the debt.