Your card issuer will report the missed payment to credit bureaus, charge you fees and interest, and eventually send your account to collections or sue you
When you miss a credit card payment, the consequences start when ready and compound over time. Your bank will charge a late fee (usually $25 to $40 for the first missed payment, more for repeat offences), add penalty interest to your balance, and report the delinquency to the three major credit bureaus — Equifax, Experian, and TransUnion. This report damages your credit score within 30 days. If you don't pay within 180 days, the card issuer typically closes your account and sells the debt to a collections agency, which then pursues you for the full amount owed plus collection fees.
The longer you go without paying, the more aggressive the collection efforts become. A collections agency can sue you in court, and if they win, they can garnish your wages, freeze your bank account, or place a lien on your property — depending on your state's laws. Even after you pay, the delinquency stays on your credit report for seven years, making it harder to borrow money, rent an apartment, or sometimes even get hired for certain jobs.
Key Takeaways
- Late fees and penalty interest start within days of a missed payment, and your credit score drops within 30 days of the first miss.
- After 180 days without payment, most card issuers close your account and sell the debt to a collections agency.
- A collections agency can sue you in court and, if they win, garnish your wages or freeze your bank account depending on your state.
- A missed payment stays on your credit report for seven years, even after you pay the debt.
- Contacting your card issuer before you miss a payment to discuss hardship options is far better than waiting for collection calls.
What happens in the first 30 days
Your card issuer will charge a late fee as soon as your payment is one day overdue. For most cards, this is $25 for a first offence and $35 for a second missed payment within six months. At the same time, your interest rate jumps — most cards include a "default rate" clause that raises your APR significantly if you miss a payment, sometimes to 29% or higher.
Within 30 days of the missed payment, your bank reports the delinquency to Equifax, Experian, and TransUnion. This report when ready lowers your credit score. The exact drop depends on your current score and credit history, but a 30-day late payment typically costs 100 to 150 points. If you have a strong score (750+), the damage is more visible. If your score is already lower, the percentage drop is smaller but the practical effect is the same: you become a riskier borrower in the eyes of lenders.
During this window, your card issuer will contact you by phone and mail. These are collection calls from the bank's own department, not yet from an outside agency. This is the easiest time to negotiate. If you call the bank and explain your situation — job loss, medical emergency, temporary cash flow problem — many issuers will work with you. They may pause interest, waive the late fee, or set up a payment plan. Once the debt goes to an outside collections agency, your options narrow.
What happens between 60 and 180 days
If you don't pay within 60 days, the late payment is reported again to the credit bureaus, and your score drops further. The bank's collection calls become more frequent and more aggressive. You may also receive written notices warning that your account will be closed and the debt sent to collections if you don't pay within a certain timeframe.
At 90 days, the delinquency is reported a third time. Your account is now considered seriously delinquent. The bank may freeze your card so you cannot use it, even though you still owe the balance. If you have other accounts with the same bank — a savings account, a car loan, a mortgage — the bank may also freeze those or explore the money in them toward your credit card debt, depending on your account agreements and state law.
Between 120 and 180 days, the bank makes a decision: pursue collection themselves or sell the debt. Most large banks sell the debt to a third-party collections agency because it is cheaper than maintaining their own collection department. When this happens, you will receive a letter from the collections agency stating the amount owed and your rights under the Fair Debt Collection Practices Act. This letter is your formal notice that the debt has changed hands.
What a collections agency does
Once a collections agency owns your debt, they have the legal right to contact you by phone, email, and mail. They cannot call before 8 a.m. or after 9 p.m., cannot contact you at work if your employer prohibits it, and cannot harass you, threaten you, or misrepresent the debt. If you send them a written request to stop contacting you, they must stop — but this does not erase the debt, and they can still sue you.
The collections agency's goal is to get you to pay in full or to negotiate a settlement (a lump sum that is less than the full amount owed). Many people in financial hardship can negotiate a settlement for 30 to 60 cents on the dollar, though this varies by agency and by how old the debt is. If you settle, ask the agency to provide a written agreement stating that the debt is "paid in full" or "settled" — not "settled for less than full balance" — because the language affects how it appears on your credit report.
If you do not pay or settle, the collections agency can sue you. They file a lawsuit in small claims court (if the debt is under $5,000 to $10,000, depending on your state) or civil court. If you are sued and do not respond to the court summons, the agency wins by default and can then pursue wage garnishment, bank account freezes, or liens on your property.
Wage garnishment and bank freezes
If a collections agency wins a lawsuit against you, they receive a judgment. With this judgment, they can ask the court to order your employer to withhold a portion of your paycheck and send it to the agency. The amount varies by state — some states allow garnishment of up to 25% of your disposable income, while others cap it at 10%. Federal law protects a minimum amount of your wages from garnishment, so your employer cannot take so much that you cannot afford basic living expenses.
A collections agency can also freeze your bank account. They file a request with the court, and if approved, the bank is ordered to hold the funds in your account and send them to the agency. This is separate from wage garnishment and can happen at the same time. Some states allow you to protect a certain amount of money in your account (called an exemption), but the rules vary widely.
A judgment can also result in a lien on your home or car. This means the agency has a legal claim on the property. If you sell the home or car, the proceeds go first to pay off the lien before you receive anything. A lien does not force you to sell, but it complicates refinancing, selling, or borrowing against the property.
How this affects your credit report and borrowing
A credit card delinquency appears on your credit report the moment it is reported to the bureaus, and it stays there for seven years from the date of the first missed payment. This is true even if you eventually pay the debt in full. The delinquency does not disappear after you pay — it straightforward changes status from "unpaid" to "paid" or "settled."
During those seven years, the delinquency makes it much harder to borrow money. Most mortgage lenders will not approve you if you have a recent delinquency on your credit report. Credit card issuers will deny you or offer only high-interest cards. Auto lenders may approve you but at a much higher interest rate. Landlords often run credit checks and may reject your process if they see a delinquency.
The impact lessens over time. A delinquency from six years ago hurts your score less than one from six months ago. After seven years, the delinquency falls off your report entirely, and your score begins to recover. However, if you were sued and a judgment was entered, that judgment may stay on your report for longer depending on your state — some states allow judgments to remain for 10 to 20 years.
What to do if you cannot pay
If you know you cannot pay your credit card bill, contact your card issuer before you miss a payment. Explain your situation and ask about hardship programs. Many banks offer temporary interest rate reductions, payment deferrals, or formal payment plans. These options are far better than missing payments because they do not damage your credit score as severely, and they show the bank you are trying to resolve the problem.
If you have already missed a payment, call the bank's collections department when ready. The sooner you contact them, the more options you have. Ask whether they will accept a partial payment, set up a payment plan, or pause interest while you get back on your feet. Get any agreement in writing before you send money.
If the debt has already gone to a collections agency, you can still negotiate. Send a written offer to settle for a specific amount, and ask them to confirm in writing that payment will close the account. Do not give them access to your bank account or agree to automatic payments until you have the written settlement agreement in hand.
If you are being sued, respond to the court summons. Do not ignore it. Even if you cannot afford to pay the full debt, showing up in court gives you a chance to negotiate a payment plan with the judge or to dispute the debt if there are errors. Ignoring a lawsuit guarantees a default judgment against you.
Frequently Asked Questions
Can a credit card company sue me for not paying?
Yes. Once your debt is sold to a collections agency or if the card issuer pursues collection themselves, they can file a lawsuit against you in civil court. If they win the judgment, they can garnish your wages, freeze your bank account, or place a lien on your property, depending on your state's laws.
Will I go to jail for not paying a credit card?
No. Debtors' prisons do not exist in the United States. However, if you are ordered to appear in court and you ignore the order, you can be held in contempt of court, which can result in jail time. Always respond to a court summons, even if you cannot pay the full debt.
How long does a missed payment stay on my credit report?
A missed payment stays on your credit report for seven years from the date of the first missed payment. After seven years, it falls off automatically. However, if a judgment was entered against you, it may remain longer depending on your state — some states allow judgments to stay for 10 to 20 years.
Can I negotiate with a collections agency to pay less than I owe?
Yes. Collections agencies often accept settlements for less than the full amount owed, typically 30 to 60 cents on the dollar. Always get the settlement agreement in writing before you pay, and make sure it states the debt will be "paid in full" or "settled" so it reports correctly on your credit report.
What should I do if I receive a court summons for credit card debt?
Respond to the summons when ready. Do not ignore it. You can respond yourself or hire an attorney. Even if you cannot afford to pay the full debt, responding gives you a chance to negotiate a payment plan with the court or to dispute the debt if there are errors in the case.