What happens if you stop paying a credit card?

The sequence is predictable. A payment even a day late incurs a fee, and once it is 30 days past due the issuer reports it to the credit bureaus, where it stays for seven years and is among the most damaging entries a score can carry. Around 60 days late many issuers apply a penalty APR, which can be far above your normal rate and can persist for months after you catch up. Interest and fees compound on the growing balance throughout.

At roughly 180 days the issuer charges off the account, an accounting step that writes it off as a loss and closes it, while the debt itself remains owed. The account is then either pursued by the issuer's collections department or sold to a debt buyer for a fraction of face value, after which you deal with the collector under the rules the Fair Debt Collection Practices Act sets. Collectors can and do sue, and a judgment permits wage garnishment or bank levies in most states, though the statute of limitations on the debt, which varies by state, eventually bars suit.

What actually helps, in order. Contact the issuer before missing a payment, since hardship programs offering reduced rates and payments exist and are far more available before delinquency than after. Pay at least the minimum if you possibly can, because the 30-day mark is the credit-score cliff. Prioritize secured debts and essentials over unsecured cards if money is genuinely short, since a card default costs your credit while a mortgage default costs your home. Nonprofit credit counseling through an NFCC-affiliated agency can set up a debt management plan with reduced rates, and it is free or low cost. Be wary of debt settlement companies that tell you to stop paying, which accelerates the damage described above.