The Consequences of Not Paying Credit Card Bills

If you're struggling financially, it's tempting to simply walk away from your credit card debt obligations. After all, it's unsecured debt, so the company can't take something away from you the way that your mortgage or auto lender could. Still, not paying your credit cards could have dire consequences for your future. It's always best to try to work out some arrangement rather than not paying at all.

Lower Credit Score

When you make late payments or stop making payments, the credit card company will report this to the credit bureaus. They'll also report a charge-off. These actions can significantly lower your credit score. This will make it difficult to get loans in the future and the loans that you are able to get will have higher interest rates. Additionally, employers sometimes check credit scores before hiring a candidate or offering a promotion, and a bad credit score could prevent you from renting an apartment. Paying just the minimum amount on your credit card bills prevents this from happening.

Calls from Debt Collectors

When you stop making payments on your credit cards, you'll start receiving phone calls from the company. This can get worse when the credit card company charges off the account and passes it on to a debt collector. Some debt collectors are very aggressive about getting the money that you owe and you may start to dread the sound of a ringing phone.

Increased Interest Rates

Credit card companies may entice you with low introductory rates, but when you read the fine print, you'll see that a late payment increases your base interest rate. What was once a low interest rate card could now have a much higher rate -- even over 30 percent.

Wage Garnishment

A credit card company or debt collection company may take you to court to receive the money that you owe. If this happens, the company is likely to win, since you do owe the money, and the court can order your wages garnished. In this case, a certain percentage of your wages will automatically go to the company. Additionally, your employer will now see that you have been financially irresponsible, which could affect your chances for promotion at work.