Missing a credit card payment may seem like a small issue, but believe it, the impacts can be significant.

The consequences include late payment fees, increased interest rates, and even negative effects on your credit score.

This article details what happens when you miss a payment, how to recover from such a situation, and how to avoid future issues.

Let’s explore everything you need to know to deal with a missed credit card payment and its implications.

What happens if you miss a credit card payment?

a man dealing with Missed a Credit Card Payment.

If you’re dealing with a missed credit card payment, it’s crucial to understand what might happen. Here are the main consequences:

There will be a late payment fee

In Canada, financial institutions typically charge a late payment fee when you fail to pay the credit card’s minimum balance by the due date.

  • These fees usually range from CAD 25 to CAD 40.
  • The more often you miss payments, the higher the penalties can be, as some companies apply progressive fees.

Therefore, avoid accumulating late credit card payments, as these penalties can quickly add up, making it even harder to pay off your balance.

The interest rate may increase

Missing a credit card payment can result in an increase in your account’s interest rate. When you miss or delay payments, card issuers may raise the standard interest rate to a “penalty rate.”

  • In Canada, this rate can exceed 29.99%, making it harder to pay off your debt.

If you’re already facing financial difficulties, this change can create a vicious cycle of default.

Introductory APR periods may be canceled

If you’ve taken advantage of a promotional zero or low interest rate (introductory APR), a missed credit card payment can cause this offer to be immediately revoked.

Many promotions in Canada are tied to on-time payments.

Once the benefit is revoked, the remaining balance begins to accrue interest at the card’s standard rate. This means your debt balance can grow much faster than expected.

Your credit score may be affected

In Canada, your credit score is one of the most important factors in your financial health, and a missed credit card payment can negatively affect it.

Late payments are recorded on your credit history, especially if the delay exceeds 30 days. Depending on the severity, your score can drop between 50 and 150 points.

A lower score can make it harder to access new credit, mortgages, and even affect rental or employment opportunities.

Installment plans may be canceled

If you’re paying off a debt in installments through a plan agreed upon with the card issuer, a late payment may invalidate the agreement.

Companies have the right to cancel installment plans if you miss a payment.

This could result in the requirement to pay the remaining balance immediately. Therefore, it’s essential to avoid any late credit card payment that could jeopardize existing agreements.

What to do if you miss a credit card payment

If you’ve missed a credit card payment, the good news is that there are strategies to minimize the impacts and recover your financial stability. 

Here are the most important steps:

Stop using the card

The first step is to stop using the card immediately. Avoid accumulating more debt while addressing the missed payment.

This also shows the lender that you’re committed to resolving the situation.

Remember that continuing to use the card without addressing the outstanding balance can further complicate your situation.

Pay the amount due or the minimum

As soon as you realize you’ve missed a payment, try to pay the amount due or at least the minimum payment.

If the due date has already passed, pay as soon as possible to minimize the impact on your credit score.

Even a partial payment can help prevent the debt from growing further due to accrued interest. The longer you take to resolve a missed credit card payment, the greater the consequences.

Negotiate with the creditor if necessary

Credit card issuers in Canada are generally willing to negotiate with customers facing financial difficulties.
Call customer service and explain your situation.

Ask if it’s possible to waive the late payment fee or temporarily reduce the interest rate.

In many cases, creditors prefer to help resolve the issue rather than let the outstanding balance grow uncontrollably.

Tips to avoid future problems with late payments

In addition to addressing immediate impacts, it’s important to take measures to avoid future issues related to missed credit card payments. Here are some useful strategies:

  • Set up automatic payments: Link your credit card to a bank account and set up automatic payments for at least the minimum balance.
  • Use reminders: Use apps or digital calendars to set up due date alerts.
  • Maintain an emergency fund: Having a financial reserve can help you avoid delays during tough times.
  • Review your budget: Ensure that your monthly expenses align with your income.

Missing a credit card payment in Canada can have serious consequences, but with the right strategies, you can minimize the impacts and avoid future issues.

Always keep in mind that the most important thing is to act quickly and responsibly to regain your financial stability.

If you have more questions about how to deal with a missed credit card payment, contact a financial advisor or seek information directly from your bank.

You can also keep browsing our website to discover plenty of information about saving, finance, credit, loans, and more!

Take advantage and also read about how to maintain your ideal credit utilization ratio.