Here’s what happens when you miss your credit card payments

Here’s what happens when you miss your credit card payments
Here’s what happens when you miss your credit card payments

7 September, 2018

Here’s what happens when you miss your credit card payments

Credit card delinquencies on the rise. Despite a strong economy and low unemployment, Americans are falling behind in paying off their credit card debt.

The delinquency rate on all U.S. credit card loans is 2.47 percent — up from 2.42 percent at the beginning of 2017 and 2.12 percent in the second quarter of 2015, according to the Federal Reserve Bank of St. Louis.

That means more than $23 billion in credit card debt is currently delinquent — 30 or more days overdue — according to a new report from the personal finance website NerdWallet.

While lack of money is the most common reason for missing a payment, forgetting to pay the bill is often the case. For its 2018 Consumer Credit Card Report, NerdWallet surveyed 2,019 U.S. adults and found that:

  • 35 percent simply forgot to make the payment.
  • 33 percent needed the money to pay for essentials.
  • 32 percent needed the money for an unexpected expense.

Kim Palmer, NerdWallet’s credit card expert, finds it “troubling” that so many people — 65 percent of those surveyed — did not pay their bill on time because they didn’t have the money. According to NerdWallet’s most-recent Household Credit Card Debt Study, income growth isn’t keeping up with some of people’s biggest expenses.

“People’s budgets are really stretched because the cost of certain essentials, like healthcare, food and housing, continue to go up and really put pressure on people’s budgets,” Palmer said. “And so, people are turning to credit cards as a way to bridge the gap when they can’t afford their monthly bills and then they’re unable to make the payments at the end of the month.”

Nerdwallet’s report found that 25 percent of those who’ve been delinquent on a credit card payment said it was because they prioritized paying off other debt.

Research by the Federal Reserve in 2017 found that when there’s not enough money to cover all monthly bills, credit card bills are more likely than other debt payments — rent or mortgage, car payment, or student loan — to go unpaid or partially unpaid.


More than one in five cardholders in the survey (21 percent) said they made a delinquent credit card payment sometime in their life. NerdWallet did the math: Using a late payment fee of $27, that’s more than $1.4 billion in penalty payments on a nationwide basis. And that’s on top of the interest charged for carrying a balance.

Adding insult to injury, falling more than 60 days behind can trigger what’s called the “penalty APR” which can be as high as 29.99 percent with some cards. That penalty APR, which makes it more expensive to carry that balance, can last for up to six months before the credit card company reviews your account to see if the rate should be lowered.

Let’s say you carry a balance of $3,000 on a card with a 15 percent interest rate and it takes you 18 months to pay off that balance. The Credit Card Payoff Calculator at shows total interest will be $368. With a default rate of 29.99 percent, that jumps to $761, more than double the carrying cost….Read More>>>



Source:- nbcnews