Here's What Happens When You Forget to Pay Your Credit Card

It's a terrible feeling. You know you're forgetting something but can't quite remember what it is. By the time you remember that you missed a credit card payment, it's too late. You make the payment but are left to wonder if there will be consequences. Here's what happens when you forget to pay your credit card.

You're responsible for interest payments

Any time you pay less than the full amount due on your credit card, interest is added to your balance. And credit card interest is not typically low. For example, the average interest rate on credit cards as of today, according to LendingTree, is 24.45%. That's the highest average rate LendingTree has recorded since it began tracking credit card interest rates in 2019.

Tip: Unless it's impossible, repay your credit cards in full each month before the billing cycle is up. That way, you avoid interest charges.

You're likely to be hit with a late payment fee

Credit card companies add a late payment fee to your balance any time you miss a payment. The average late payment fee is $30 for the first offense and $41 for each subsequent late payment, according to Consumer Reports. Adding late fees to your balance represents a double whammy: You're that much further away from paying your card off, and you'll pay interest on the late payment fee.

Tip: The moment you take out a new credit card, sign up for automatic payments so you never have to worry about a late payment. Also, call the credit card company and see if it will waive the late fee. This often works if you're usually on time and have already paid the late amount when you ask.

You'll lose out on 0% APR

If the reason you're using a specific card is that you were able to snag an introductory 0% APR, there's a good chance the credit card company will cancel the promo APR after the first late payment, and your rate will shoot up to the standard APR.

Tip: Make it a habit to have your payment in several days before it's due, thereby building yourself a safety barrier. Even if you're signed up for automatic payments, ask the company to set it up a few days early. You want to do everything possible to protect a 0% APR.

You may be hit with a penalty APR

A missed payment may prompt the credit card company to take another look at your credit profile and bump the rate up significantly. Surprisingly, there is no federal law that limits how much a credit card company can charge in interest.

Tip: If your rate does spike, it doesn't have to remain elevated forever. Call your credit card company and ask what it will take to move the rate back to where it was. For example, some companies require two consecutive on-time payments.

Your credit score will take a hit

How big a hit your credit score takes depends on how late your payment is. For example, being 30 days late is less damaging to your credit than being 60 or 90 days late. FICO does not share specifics, but it appears that the most severe penalties are saved for those with the highest credit scores. For example, if your credit score is just shy of 800, you'll see a bigger drop after making a late payment than someone starting with a score of 625. In either case, a single late payment will make a noticeable dent in your credit.

Tip: Once you realize you've missed a payment, make at least a minimum payment as soon as possible. What you want to avoid is being 30 days late. Let's say you end up being seven days late by the time your payment arrives. You'll still be responsible for paying a late fee, but as long as you're not more than 30 days past due, you'll avoid an impact to your credit report.

The phrases "No one's perfect" and "Life happens" both apply here. The best any of us can do is learn from our mistakes and make moves to prevent them from happening again. And the best way to do that with credit cards is to sign up for automatic payments.