We all know that missing a credit card payment is bad. It can have negative effects on your credit score, leave blemishes on your credit report, and if missed long enough you can be sent to collections and even sued. Furthermore, the cost of the credit increases, and you’ll probably be hit with a late fee. In some states, having the decrease in your credit can even cause your mortgage and insurance rates to increase! In a recent poll however, around 34 million Americans have admitted to making a late payment.
Much like the housing crisis in 2007 caused by “subprime lending” or lending to individuals with a lower than average credit rating, the credit card companies relaxed their rules in 2014. This has led to an increase in subprime card lending by nearly 20% or roughly 20 million new cards. A TransUnion report describes that 3% of all credit cards issued since 2015 are 90 days or more behind, which is a nearly 100% increase from 2013 where only 1.5% of all credit cards where this far behind.
As already mentioned, a missed credit card payment can be detrimental to your financial future, so it’s important to never spend frivolously on a credit card. Any credit card purchases made should have at least 50% backed up by money in a checking or savings account and no purchases should ever be made that can’t be totally paid back within 30 days. If you’ve already fallen behind, stay in touch with your credit card provider to keep them abreast of your situation and when they can expect the next payment.
If you’re currently behind on your credit card payments and just can’t find room in your budget to pay them, you first want to call the card company and talk to their hardship and credit counseling department who may be able to break up your payments into smaller installments to make them more manageable. If you have been sent to collections or have a legal action taken against you, an Ohio Bankruptcy attorney can help you stop your creditors from any further actions and to cease and desist all legal and collection attempts. This occurs once you file bankruptcy, which can allow you the opportunity to liquidate your debt, or allow you time to formulate a repayment plan.