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When you fail to pay a credit card bill, your card may enter into default, significantly damaging your credit score and limiting your access to new cards and credit.
Missing a couple of payments isn’t the same as defaulting. Instead, a default usually occurs when you fail to pay the minimum amount due for a few months. In most cases, you’ll receive a default notice after missing payments for six months.
A credit card default notice is a letter from your card issuer that says that your account has unpaid bills and is going to default. The notice typically gives you a couple of weeks to pay off missed payments or face losing your account.
This type of notice can be recorded in your credit report, dinging your credit score and making it harder to get a new card or a personal loan or even open a bank account in the future.
A default is bad news for anybody. If you have a default on a credit card, a different scenarios could unfold, depending on the amount of your debt and the policies of the lender. Here are the most likely outcomes:
When you receive a default notice, your creditor will ask you to pay the full amount of your debt. You can offer to make monthly payments at a rate you can afford, but it is unlikely your creditor will agree.
If you can’t pay in full or find a compromise payment plan, your account will be closed and, after 180 days, will be reported to credit bureaus. After the account is defaulted, your credit card issuer has the right to take these actions against you:
There are few options for dealing with a credit card default:
If you're worried about missing payments, we're here to help. Bright is an easy and smart way to manage your credit cards.
Bright’s MoneyScience™ AI studies your spending habits and analyzes your debts, then finds the fastest, smartest way to pay off your cards, making payments for you, always on time and at a pace you can afford.
If you don't have it yet, download the Bright app on the App Store or Google Play. Connect your checking account and credit cards, set a few goals and let Bright get to work!