This Is What Happens When You Fall Behind on Your Credit Card Payments

American credit card debt recently reached a record $1.13 trillion. With inflation still elevated and the cost of nearly everything being more expensive than it was just a few years ago, it's no surprise that many consumers are reaching for their credit cards.

All this debt means that some Americans are having a hard time keeping up with their payments. Unfortunately, late credit card payments negatively impact your finances and budget in several ways.

If you're having trouble paying your credit card balance, here are a few things you should know and some suggestions on how to get back on track.

Your interest rate may go up

Capital One says your credit card's APR could increase if your payments are 60 days or more late. Not all credit issuers will raise your interest rate after a late payment, but some will -- and it could be up to 30% more than your current credit card interest rate.

For example, let's assume you have $4,000 in credit card debt with an APR of 17% and pay $200 per month toward the balance. If you miss payments for more than 60 days and your rate jumps to 22%, it will take you one month longer to pay off that amount, and you'll spend an additional $292 in interest.

You might pay a late fee

Many credit card companies charge a late fee each time your payment isn't made on time. The fee usually costs between $32 to $41. That might not seem too expensive, but more than one late payment can add up quickly.

Let's say you have a credit card balance of $3,000 with a 20% APR and pay $100 toward it every month. It'll take 42 months to pay off, and your total interest will be $1,193. But if you miss two payments and get charged $50 in fees, then your balance goes up to $3,050. It will take you one additional month to pay off, and you'll spend $1,245 in interest.

So, the two late payments cost you $50, plus $52 extra in interest on your balance, for a total of $102 extra.

Your credit score may drop

Even a payment that's 30 days late can show up on your credit report, and it often stays there for up to seven years. The result is that your credit score will likely go down.

Your payment history is one of the most important factors determining your credit score, accounting for 35% of your overall score. Even one late payment could lower your score by up to 180 points.

The good news is that your late payments have less influence on your credit score over time.

Your credit limit can be lowered

Your credit card company could lower the amount of credit you have access to if you make a late payment. According to the Fair Credit Reporting Act, your credit card company has to inform you before lowering your credit limit. It can do this either by phone or by mail.

What's bad about having a lower credit limit, in addition to having access to less credit, is that the lower limit will probably negatively affect your credit score. Using more than 30% of your available credit usually results in a lower score.

For example, if you have a credit limit of $10,000 and a balance of $2,500, your utilization rate is 25%. But if your credit card company cuts your limit to $8,000, your utilization rate would automatically go up to more than 31%, which could result in a lower score.

What to do if your payment is late

The best way to avoid missing a payment is to set up automatic payments via your bank account. This will ensure that you're making at least the minimum payment every month. Making minimum payments won't help you pay your balance off quickly, but it will keep you from missing payments.

If you happen to miss a payment, make it right away. Most credit card companies don't report late payments until they're 30 days past due. So, paying your bill as soon as possible can help keep the late payment off of your credit report.

It's also a good idea to give your credit card company a call if you miss a payment. Your card issuer may be willing to waive the late fee or not raise your interest rate if you explain why your payment was late.

Finally, if you need help with your credit card debt, talking with a credit counselor can help. You can find certified counselors at the National Foundation for Credit Counseling, which is the largest nonprofit credit counseling organization.