When you forget to pay your credit card bill

Does your credit score take an immediate hit?

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So a funny thing happened a little while back, I forgot to pay my credit card bill. It’s only funny because I’m constantly preaching about how we need to pay our credit card bills on time and in full, yet somehow I forgot. Okay, some people call it irony, but ignoring your bills is really no laughing matter.

It was pretty obvious to me that something was wrong when I checked my most recent statement and it was showing interest charges. I thought maybe I had inputted the wrong amount when I did my online banking last, but it turns out I didn’t pay anything at all. Even though I didn’t make the minimum payment, I wasn’t too worried; here’s why.

What to do if you forget to pay your credit card bill

Immediately upon realizing my mistake, I paid the entire outstanding balance including the interest charges. Fortunately, I always pay my bills on time and in full so I knew I had a strong case to get the interest charges reversed.

I called my credit card provider (TD) and explained my situation. I was expecting a little bit of a battle, but the rep credited me the amount back right away. She could obviously see on my file that I had been a client for a long time and normally make my payments on time. But I’ve found that asking for a refund can be tricky especially when clearly it was my own fault.

The best part of the experience was the fact that there were no questions asked or upsell attempted. In the past when this happened (yes, this is not the first time), the rep would try to sell me on balance protection which is a complete waste of money. This is especially surprising considering TD made headlines recently for overselling.

If you have a good credit history, it’s likely that your credit card will reverse any interest charges if you forget to make a payment.

Doesn’t my credit score take a hit?

Some people freak out about missing a credit card payment because they’re worried it’s going to ruin their credit. It’s a legitimate concern, but your credit only takes after you miss two consecutive payments. You’ll likely see a drop of 60 – 100 points on your credit score instantly, and your credit card provider may end up increasing your interest rate.

You obviously don’t want your credit score to drop since that determines how creditworthy you are. If you ever plan on getting a major loan in the future such as a mortgage or car loan, you’ll want to have your credit score in good standing.

It’s still possible to get a loan with a lower credit score, but you might not qualify for the amount you need, and you may be charged a higher interest rate. Neither one of those scenarios is ideal.

Ignoring your credit card bills

After missing two payments, it’s likely your credit card provider will up your interest rate and try to contact you to find out why you haven’t been paying your bills. They’ll probably contact you by phone and possibly by mail, but there’s no guarantee that they’ll do either.

They want you to settle your debt, but if you don’t respond, they may sell that debt to a collection agency. If that happens, you’ll take another hit to your credit score which will make it very difficult to get a loan in the future since that debt will still be on your credit history.

Collection agencies can be aggressive when trying to collect their debts. They’ve known to contact people at home and work. They’ve even gone as far as contacting family members. This is not a path you want to go down.

Final word

Don’t worry if you made an honest mistake and forgot to pay your credit card bill. It’s highly likely you’ll get refunded the charges as long as you pay your balance in full right away. Just don’t make a habit of it as it can affect you long-term.

Barry Choi is a personal finance and budget travel expert at Moneywehave.com

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