This article discusses the alarming rise in credit card defaults in the US, reaching a record $46 billion in the first nine months of 2024. Experts explain the consequences of default, the importance of proactive steps, and potential solutions for those struggling to make payments.
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There are several levels of consequences when credit card payments are not made. It begins with late fees, higher interest rates and a potentially lower credit score. If a borrower doesn't pay for 30 days the bank considers the credit card “delinquent” and the borrower's credit scores can be damaged further.
Sotir and Bandebo recommend that you reach out to your credit card company to negotiate the debt since it’s in the bank’s best interest to help you catch up. If your account goes to a collections agency, find out if they can offer a payment plan or seek help from a non-profit credit counseling organization or financial advisor.
Other alternatives include reaching out to a credit counseling organization or transferring your credit card debt to a 0% interest card, though that typically comes with a fee.Defaulting on a credit card will mean serious consequences for your credit score, and that will limit how much you will be able to borrow in the future, and how much it will cost you. If you don't pay your credit card bill for a month, your credit score will likely fall between 60 and 100 points, said Bandebo.
“For most people, it's really about understanding how much money is coming in and where it's going,” added Sotir.
CREDIT CARD DEFAULTS ECONOMY CONSUMER FINANCE DEBT BANKRUPTCY
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