Have you defaulted on your credit card? If so, you're probably worried about what can happen to you after you fail to pay the bill.
Below are five domino effects of credit card default:
- If you default on your credit card, your interest rate could increase significantly. Credit card default is costly and once your interest rate increases you could be facing a bill that is much more than your original purchases.
- Once you default on your credit card, late fees will be added immediately to your account. For every billing cycle that you miss, you will accrue a late fee. Even if you make a small payment every month, if it is not the minimum payment required on your credit card you will be charged a late fee.
- Once you default on your credit card, you could face account closure or the lowering of your credit limit. Even if your account is closed or your credit limit is lowered, you will still owe the amount charged, interest, late fees and any penalties added to the credit card account.
- Once you default on your credit card, you could face a lawsuit. This usually happens about six months to a year after your last payment. If, or when the credit card company wins the lawsuit, they will get a judgment against you. A judgment will allow them to seize your bank account or garnish your wages.
- Once you default on your credit card, it will be more difficult to secure other types of credit, purchase a home or even rent an apartment.