What happens if you don’t pay your credit card bill?
If you're worried you’ll miss the due date for your next credit card bill, the first thing you should do is call your bank.
We’re reader-supported and may be paid when you visit links to partner sites. We don’t compare all products in the market, but we’re working on it!
If you miss a credit card repayment, the consequences vary from a late payment fee to a black mark on your credit history. If you're struggling financially or dealing with other issues, talk to your bank or provider about what's going on. You may be able to set up an alternative, such as a payment plan or hardship variation.
The consequences of not paying your credit card on time
What happens when you miss a payment on your credit card varies depending on the circumstances and your credit card provider, but these are some of the possible outcomes:
You could be charged a late payment fee.
Most credit cards charge a fee if you don’t pay the minimum amount required by the due date on your statement. This charge ranges from $9 to $35 and is applied after the due date on the statement.
The details will be added to your credit report.
Since the introduction of comprehensive credit reporting on 1 July 2019, your credit report now includes your monthly repayments for the last two years. This includes whether or not you've made payments on time. Depending on how late the payment is and when you settle it, missing your credit card due date could cause your credit score to drop and will reduce your chances of getting approved for new loans. You can view a free copy of your credit report online through Finder.
You’ll be charged interest.
When you miss a payment, interest will be charged for all transactions during the statement period. You’ll also be charged interest on any late payment fees, so these costs could quickly add up.
You won’t get any interest free days.
The interest-free period available on your credit card is only available when you pay your balance in full and on time for each statement period. So if you make a late payment on your credit card, you won’t get any interest free days. This means you’ll have to pay interest for the purchases you’ve made during that statement period. You’ll also have to pay your balance in full for at least two consecutive statement periods to be eligible for interest-free days again.
It could affect your reward points.
Most credit card issuers reserve the right to freeze or cancel your reward program privileges (including earning points for purchases) if you don’t make a payment by the due date on your statement. The American Express Membership Rewards program terms and conditions even state that your enrolment may be cancelled if your payment is more than 40 days overdue.
It may lead to a default notice.
If you have an overdue payment of more than $150 for 60 days or more, it can be classified as being “in default”. This results in an official notification from your credit card issuer and a listing on your credit history. Default account listings are a major black mark and will remain on your credit report for up to five years. As well as the future implications of a default credit card account, you can expect to be contacted regularly by your issuer to arrange to settle the outstanding debt.
You could have to deal with debt collectors.
If you don’t make a payment on your credit card account for more than 60 days, your issuer may pass the debt on to a collection agency. Debt collectors have a different approach to credit card companies and it could be much more difficult to deal with the situation if they get involved.
Keep in mind that these consequences are usually imposed over a period of time and the longer you don’t make a payment on your credit card, the worse things could get. It’s also worth noting that every credit card company has a different approach to late payments. So make sure you read the Product Disclosure Statement for your credit card or contact your provider to find out specific details of how a late payment will impact your account.
Could I be sued for unpaid credit card debt?
While you could eventually receive a court order for an unpaid credit card account, you have a number of opportunities to deal with the debt before this legal action is considered.
In most cases, you would have at least 90 days to deal with the outstanding debt before further action is taken.
This is because you have to be issued with a default notice and given at least 30 days to settle the default before your provider (or a debt collector) can take court action for a personal debt. And a default notice is only issued when the outstanding payment is late by 60 days or more.
What this means is that being sued for credit card debt is a very extreme outcome.
What happens if I do get a court order?
First of all, it will be a civil court case, rather than a criminal case. This means you won't go to jail for unpaid credit card debt in Australia.
With this type of court order, the judge will consider the circumstances before deciding on the next steps. So you will have an opportunity to put forward a defence.
At this point, it's worth noting that you may not have to pay the debt if your only source of income is from Centrelink or Workcover.
But if the judge rules that you do have to pay it, you may still be given a few options for repayments, such as a reduced amount you need to pay in full or an instalment plan.
The bottom line here is that if you're struggling with your credit card debt, contact your provider as soon as possible to talk about your options so that you can avoid some of the more serious actions they or a debt collector may take. You can also get financial help from a support service in your state or territory, or call the National Debt Helpline on 1800 007 007 to speak to a financial counsellor for free.
What to do if you can’t afford to pay your credit card bill on time
If you know that you won't be able to make a payment by the statement due date, here are 3 steps that you can take to resolve the issue.
1. Contact your credit card company.
Call your credit card company using the phone number on the back of your card on in the information booklet and let them know about your circumstances so that they can work with you to resolve the situation.
2. Request a due date extension.
If you know when you will have money to pay at least the minimum off your card, you could request that your credit card company extend the due date for this particular statement. If your request is approved you could avoid fees and negative details on your credit report, but it will be at your credit card company’s discretion.
3. Suggest a hardship variation or hardship support.
If you’re experiencing ongoing financial hardship or illness and don’t know when you’ll be able to make the minimum payment on your credit card, you may want to consider a hardship variation. This is a formal legal process where you ask your lender to vary the terms of the contract. Hardship support and variations could involve some of the following options:
- A freeze on your credit card account, meaning you won't be able to use it for new purchases (which would add to the debt)
- A payment pause where you won't have to make repayments for a limited time due to hardship (such as job loss)
- A payment plan
Your credit card provider may also suggest other option that takes the immediate pressure off of you while you deal with the situation.
If multiple debts are a factor, it’s also important to deal with them as quickly as possible so that you don’t end up with a lot of overdue accounts. You can start by creating a budget based on your income and the required minimum payments for each debt, as well as potential interest charges. You may also want to consider consolidating debts with a balance transfer credit card or personal loan to make fewer payments and save money on fees and charges. See Finder's guide to getting help if you're experiencing financial hardship for more information.
Tips to help you pay your credit card bill on time
- Set a reminder. Write the statement due date on your calendar or in your phone to make sure you know exactly when your credit card payment is due. You may even want to set a reminder a few days before the due date to factor in the time it takes for your payment to go through.
- Make automatic payments. Most credit card companies provide an auto payment option for your account. This means the funds will automatically come out of your nominated debit or savings account before or on the due date for each statement so that you don’t have to worry about late payments. You’ll also have the option of paying the full amount owed, the minimum, or a fixed dollar amount (as long as it’s more than the minimum required), although other charges will still apply if you end up carrying a balance on your card.
- Pay off your card before the due date. If you’re going overseas or know that you might forget about your credit card payment in the future, you could choose to pay off the balance sooner than required. The due date on your statement is really the latest you should make a payment, so transferring money to your credit card account before that is fine. In fact, it could help you avoid interest charges on the balance (which are calculated daily).
- Pay as you go. You can make multiple payments to your credit card account during each statement period. Simply find out the account details needed for a bank transfer or BPAY transaction, and move the money from your bank account to your credit card whenever you want to make a payment. As long as the amount you transfer adds up to more than the minimum required on the statement, this option will help you avoid late payments. It could also help you save money on interest charges by reducing your balance throughout the statement period.
- Budget for payments. Factoring your credit card payments into your ongoing budget will help ensure you’re financially prepared for each statement due date. You may even want to go over your previous statements and work out your average payment, or use our repayment calculator so that you get a clear idea of what you’re likely to owe each month.
- Choose a card that suits your needs. One of the most important things to consider when you have a credit card is whether or not it works for you. For example, if you have a card with a high annual fee and high-interest rate but rarely make purchases and carry a balance, it will be more expensive and more difficult to make payments when compared to a card with low fees and a low ongoing interest rate. Think about how you use your credit card and the features you want, and then compare your options to find one that offers the most value based on these needs.
If you’re strapped for cash or not keeping track of your credit card bills, you could miss the payment due date and end up paying more fees as a result. Now that you know the potential impacts and some tips to help manage your credit card payments, you can get your accounts under control.
You might also be interested in:
More guides on Finder
Westpac Flex Card
This 0% interest credit card from Westpac offers a $1,000 limit and a flat monthly fee that can be waived – plus you can use it as soon as you’re approved.
Westpac’s no interest credit card: How does it compare to CommBank and NAB?
The Westpac Flex Card is coming soon, with no interest ever and a $10 monthly fee that's waived if you don't have an outstanding balance.
Citi Rewards Card – Purchase and Balance Transfer Offer
With 0% interest for 14 months on purchases and balance transfers, is this Citi Rewards Card offer right for you?
9 ways to save $2,800+ on your bills
An investment of a few hours could save you thousands of dollars – here's how to bring down your household bills.
October’s best balance transfer credit card offers
Nix credit card debt with these balance transfer offers, which mean you can switch and save with 0% interest for up to 36 months.
CommBank Ultimate Awards Credit Card with Qantas Points
With 70,000 bonus Qantas Points on offer and up to 1.2 points per $1 spent, how do the features on this CommBank credit card stack up?
The surprising thing Apple Pay can do with your credit card
Had your credit card been cancelled? Apple is more on top of that than you might think.
In 9 years I’ve never paid credit card interest – here’s how
I've had 4 credit cards, earned a lot of points and used perks without ever paying a cent in interest – and you can too.
September’s best balance transfer credit card offers
Standard credit card interest rates haven't changed much, but these balance transfer offers give you a way to save with 0% interest for up to 36 months.
Velocity and bundll’s BNPL partnership: Get your 5,000 points
In an Australian first consumers will be able to earn points as they pay off their BNPL debt.
Ask an Expert