Failure to pay credit card bills can be very serious, resulting in increased debt, a damaged credit score, and potential lawsuits by credit card debt collectors. If you have a credit card, be sure to budget your finances so you can avoid these side effects of not paying your credit card bills.

Late Payments

Some people can pay their credit cards, but they have to wait for payday to roll around, which may be after the deadline for the credit card bill. This results in late payments. Late payments are not the worst option if you can’t afford your credit card bills, but they do have an effect on your credit score and on the status of your account. Some credit card companies charge tremendous late fees, which makes paying the bill even more difficult. Others may forgive the first late payment, but charge on the second and following late payments. These charges add up quickly and will be added to your overall balance.

Damage to Credit Score

If you do not pay your credit card bills on time, this results in damage to your credit score. Your credit score is used to measure your ability to take out loans on cars, homes, and other expensive products. The lower your credit score, the less likely you are going to be able to receive a loan from a bank to make such purposes. Credit card companies report late payments and defaults to credit unions, which then reflect on your score. Likewise, if you make regular payments on your credit card and do not default on payment, your credit score will go up and you will be able to receive more loans for expensive purchases.

Delinquency

Once you have failed to pay your credit card for a few months, your account becomes delinquent and your card will be canceled. This means that you no longer have access to the money on your credit card account and there are further consequences. Often, credit card companies will send your bill to a collection agency, which charges other fees to get your account out of a delinquent state. Other times, the credit card company will choose to sue you for the amount of money that you owe on your card. This results in expensive court fees and lawyer fees, and should be avoided at all costs. Both of these options can be avoided by making payments on time.

Extended Effects

Even if you pay off your credit card debt once it goes into delinquency, there are still some effects that will last for a while after that. It takes a long time to build up a good credit score, so this will take some time to recover after failing to pay back credit card debts. The way to build up your credit score again is to be sure and pay your bills on time and to keep track of your finances in order to avoid having another delinquent account. It may also be difficult to receive loans of any kind for years after having a delinquent account. Always be sure you can afford a bill before taking on debt of any kind, and you will be able to avoid this process entirely.