Can't pay your credit card? What happens and what to do

What happens if you miss payments

1. Late payment charges (usually capped at a modest amount) and missed payment markers on your credit file.
2. Arrears letters, and contact from the provider’s collections team.
3. A default notice, giving you at least 14 days to catch up before the account is terminated.
4. The account defaults and is recorded on your credit file for six years from the default date.
5. The debt may be sold to a debt purchaser. Read letters from Lowell, Cabot or Intrum.
6. Court action is possible, leading to a county court judgment. Read what is a CCJ?

The FCA’s persistent debt rules

If you’ve paid more in interest, fees and charges than towards the balance over 18 months, you’re in “persistent debt”. Your provider must contact you and explain the options. If you’re still in persistent debt after 36 months, it must offer you a way to repay the balance in a reasonable time and, if you can’t afford that, it may need to reduce, waive or cancel interest and charges.

Practical options

• Ask your provider for help: reduced payments, interest freezes or a payment plan.
• A 0% balance transfer can help if your credit rating is still good and you can clear the balance in the promotional period.
• A debt management plan for several cards – free from charities. Read debt management plans explained.
• A formal solution if you can’t repay in full: a Debt Relief Order, an IVA or bankruptcy.
• Breathing Space to freeze interest and stop action for 60 days while you get advice.

Can bailiffs come for credit card debt?

Only after a county court judgment that you then don’t pay. Because most credit card agreements are regulated by the Consumer Credit Act, they must be enforced in the county court, so they can’t be passed to High Court Enforcement Officers. Read debt collectors vs bailiffs.

Pay priority debts first

Credit cards are a non-priority debt. If money is tight, pay rent or mortgage, council tax and energy first. Read priority debts.

Frequently asked questions

Can I go to prison for not paying a credit card?

No. Credit card debt is a civil debt, and you can’t be sent to prison for it.

Will my credit card debt be written off after six years?

Not automatically. The default drops off your credit file after six years, and the debt may become statute-barred if there’s been no court action, payment or written acknowledgment. Read statute-barred debt.

Can my credit card company take money from my bank account?

Only if you bank with the same group, through its right of set-off, or after a court judgment and a third party debt order. Read can bailiffs take money from my bank account?

Sources

• FCA Handbook, CONC 6.7: persistent debt rules
• FCA Handbook, CONC 7: Arrears, default and recovery
• Consumer Credit Act 1974