Your card gets closed, your debt grows, and your credit score drops — but the consequences unfold over weeks and months, not overnight

When you miss a credit card payment, the card issuer marks your account delinquent after 30 days. Your interest rate may jump to a penalty rate (often 29.99% or higher, depending on your card's terms), and you start owing late fees — typically $25 to $40 per missed payment. Your credit score begins to fall immediately, and the damage compounds with each month you don't pay. After 180 days of non-payment, the issuer usually closes your account and sells the debt to a collection agency, which then pursues you for the full amount owed plus collection costs.

Key Takeaways

  • Your account becomes delinquent after 30 days, and your interest rate typically jumps to a penalty rate that can exceed 29%.
  • Late fees of $25 to $40 are added each month you don't pay, and your credit score drops with each missed payment.
  • After 180 days of non-payment, the issuer closes your account and sells the debt to a collection agency that can sue you.
  • A collection agency can report the debt to credit bureaus for up to seven years and pursue wage garnishment or bank account levies in most states.
  • Contacting your card issuer before you miss a payment to request a hardship plan or lower rate may prevent some of these consequences.

What happens in the first 30 days

Missing your first payment does not immediately trigger penalties, but your card issuer will contact you — usually by phone, email, or mail — to remind you the payment is due. If you pay within a few days of the due date, you may owe only a small late fee, often $25 to $40, depending on your card's terms. Your credit score does not take a hit until the payment is 30 days late.

If you know you cannot pay on time, contact your card issuer before the due date. Many issuers offer hardship programs that lower your interest rate, waive late fees, or allow you to pause payments for a set period. These programs are not advertised widely, but they exist — you have to ask. The issuer is more likely to work with you if you call before you miss a payment than after.

Delinquency, penalty rates, and credit damage at 30 to 90 days

Once your payment is 30 days late, your account is officially delinquent. Your card issuer reports this to the three major credit bureaus — Equifax, Experian, and TransUnion — and your credit score drops. The exact drop depends on your score before the missed payment and your overall credit history, but a single 30-day late payment typically lowers your score by 50 to 100 points.

At this stage, your card issuer may also raise your interest rate to a penalty rate, which can be as high as 29.99% or the maximum allowed by your state's law. This rate applies to your existing balance, so your debt grows faster each month. Late fees continue to accumulate — another $25 to $40 for each month you don't pay. If you miss a second payment (60 days late), the damage to your credit score deepens, and your card issuer may freeze your account, preventing you from making new charges.

Charge-off and collection agency involvement at 180 days

After six months (180 days) of non-payment, your card issuer typically writes off the debt as uncollectible and closes your account. This is called a charge-off. The issuer reports it to the credit bureaus, and your credit score takes another significant hit. However, the charge-off does not erase your legal obligation to pay — it simply means the issuer has given up trying to collect and is moving the debt elsewhere.

Most card issuers sell charged-off debt to a collection agency for a fraction of what you owe — often 5 to 10 cents on the dollar. The collection agency then owns the debt and can pursue you for the full amount you originally owed, plus collection costs and interest (where state law allows). The collection agency can call you, send letters, and report the debt to credit bureaus. The charge-off and collection account both appear on your credit report and damage your score for seven years from the date of the first missed payment.

Collection lawsuits and wage garnishment

If you do not respond to collection agency letters or calls, the agency may file a lawsuit against you in civil court. If the agency wins — which happens in most cases where the defendant does not show up — the court issues a judgment against you. A judgment is a legal order that you owe the money, and it gives the collection agency the right to pursue additional collection methods.

With a judgment, the collection agency can seek wage garnishment, which means the court orders your employer to send a portion of your paycheck directly to the agency. The amount varies by state and by the type of debt, but federal law caps wage garnishment at 25% of your disposable income for most debts. Some states allow lower percentages or protect certain types of income. The agency can also request a bank account levy, which freezes your account and allows the agency to take money directly from it to pay the judgment. Bank levies typically happen after wage garnishment fails or when the agency knows you have savings.

How long collection accounts stay on your credit report

A collection account remains on your credit report for seven years from the date of the first missed payment on the original card — not from the date the collection agency bought the debt. This seven-year period is set by federal law and applies regardless of whether you eventually pay the collection agency. Even if you pay the debt in full, the collection account stays on your report for the full seven years, though some credit scoring models treat a paid collection account slightly better than an unpaid one.

After seven years, the collection account falls off your credit report automatically. However, the collection agency can still pursue you legally in most states if the statute of limitations for debt collection has not expired. The statute of limitations varies by state and by the type of debt — it ranges from three to ten years — so you may still owe the debt even after it leaves your credit report.

What you can do if you cannot pay

If you know you cannot pay your credit card bill, contact your card issuer immediately. Explain your situation and ask about hardship programs, temporary rate reductions, or payment plans. Some issuers will lower your interest rate, waive late fees, or allow you to make smaller payments for a set period. These options are most available if you reach out before you miss a payment.

If you have already missed payments, you can still negotiate with the collection agency. Many agencies will accept a settlement — a lump sum that is less than the full amount owed — to close the account. Settlement negotiations usually happen in writing, and you should ask the agency to remove the account from your credit report in exchange for payment (though they are not required to do so). Get any settlement agreement in writing before you pay.

You can also dispute inaccurate information on your credit report by contacting the credit bureau directly. If the collection agency cannot verify the debt, the bureau must remove it from your report. This is a slower process — it typically takes 30 to 45 days — but it is free and does not require a lawyer.

Frequently Asked Questions

Can a collection agency garnish my wages if I live in a state that protects certain income?

It depends on your state and the type of income. Some states protect Social Security, disability payments, and unemployment benefits from garnishment. Federal law protects Social Security from most collection agencies, but not from the IRS or student loan servicers. Contact your state's attorney general's office or a local legal aid organization to learn what income is protected in your state.

What is the difference between a charge-off and a collection account?

A charge-off is when your card issuer writes off the debt as uncollectible and closes your account. A collection account is created when a collection agency buys the debt and takes over collection efforts. Both appear on your credit report, and both damage your score. You can have both on your report at the same time if the issuer reports the charge-off and then sells the debt to an agency.

If I pay a collection agency, will it remove the account from my credit report?

Paying the collection agency does not automatically remove the account from your credit report. You can ask the agency to remove it in exchange for payment, but they are not required to agree. Get any removal agreement in writing before you pay. Even if the account stays on your report, paying it may improve your credit score slightly over time.

How long can a collection agency pursue me for credit card debt?

A collection agency can pursue you legally only within your state's statute of limitations, which ranges from three to ten years depending on the state and the type of debt. After the statute expires, the agency cannot sue you, but it can still contact you and report the debt to credit bureaus (until seven years from the first missed payment). Check your state's laws to learn your statute of limitations.

Can I negotiate with my card issuer after I have already missed payments?

Yes, but your options are more limited. If your account is still with the card issuer (before charge-off), you can ask about a payment plan or hardship program. Once the account is charged off and sold to a collection agency, you negotiate with the agency, not the issuer. The agency is more likely to negotiate if you contact them early, before they file a lawsuit.