Late Fee
Creditors will consider you in default as early as one day after the payment is due. The first thing that happens after you default on a credit card is that you are charged a late fee by the credit card company. The late fee is usually anywhere from $15 to $40 dollars per incident. The late fee is immediately charged to your account.
Default Rate Applies
Credit card companies list what is called a "default rate" on your credit card agreement. If you fail to make a payment on time, the company can decide to apply this higher rate to your account. So when you miss even just one payment, your rate may go up to the default APR. Also, when you default on your credit card account, any promotional rates you have will likely expire.
Credit Reporting
If you do not pay your credit card bill amount due within 30 days of the due date, your account may be reported to one or more of the three credit bureaus (Experian, Equifax, Transunion). This 30-day-late mark on your credit report reduces your credit score.
Calls From the Creditor
Representatives from your credit card company will start to call you more and more frequently when you default on your credit card account. They will call to find out if there is a problem, and ask when the company can expect to receive a payment.
Transfer to a Collection Agency
After repeated failed attempts to reach you to receive payment, the credit card company may sell your account to a third-party collection agency. The agency then takes over the job of calling you about your payment due. The calls from a collection agency are usually more frequent and often much more prying than calls from the credit card company.
Possible Legal Consequences
If the credit card company is unable to reach you or come to an agreement regarding payment on the account either directly or through a collection agency, the creditor may decide to sue you to collect the amount due. If the creditor wins a judgment on the case, the company may then attempt to garnishee your wages to collect the money that you owe.
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