If financial strain or simple forgetfulness causes you to neglect your outstanding credit card balance, you may face additional fees, interest rate increases, collection activity, credit damage and even a lawsuit for the amount you owe.
Significance
According to the Federal Reserve Board, failing to pay your credit card balance can leave you facing a higher interest rate if your credit account has been open longer than a year. If your payment arrives more than 60 days past the due date, however, the company may increase your interest rate at any time. Your credit card company can also charge you late fees for the missed payments.
Features
If you fail to make a payment for 180 days, your credit card provider has the right to charge off your account and sell it to a collection agency. This not only damages your credit score but can result in aggressive collection activity, such as repetitive telephone calls and letters, from debt collectors.
Effects
Continuing to ignore the debt could result in a lawsuit from the collection agency. If you lose the court case, the collection agency may force you to pay the credit card balance through wage garnishment. A collection agency may even seize money from your bank account after a lawsuit.
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