What Do Credit Card Companies Do On Default?Credit Card Companies Charge Higher Interest Rates When you signed on the dotted line for your credit card, your agreement with the credit card company indicated what your interest rate would be if you defaulted. By law, once you default on your credit card payments, the credit card company is immediately able to charge you a higher interest rate. Unfortunately, credit card companies can often increase your interest rate if you default on any other account that may be noted on your credit report. Check your agreement to see if that clause is included in your agreement.
Credit Card Companies Charge Late Fees Along with the interest rate indicated in your agreement with the credit card company, a specific charge for late fees was included. Once you default, not only are you charged higher interest, but late charges begin to be assessed monthly. You Begin To Receive Collections Phone Calls After defaulting on a credit card, you will begin to receive collection phone calls. The credit card company will endeavor to collect in any way lawful. They will attempt to work out a repayment schedule with you in order to satisfy the debt. The Federal Trade Commission has laws in place that govern how and when credit card companies can contact to collect. Credit card companies are to abide by these laws. Credit Card Companies Report Late Payments To Credit Reporting Agencies While you are in default, credit card companies report your late payments to the three major credit reporting agencies – Experian, Equifax and TransUnion. If you obtain a copy of your credit report you will see the late payments typically identified in increments of 30 days late – e.g., 30 days, 60 days, 90 days, etc. This will negatively impact your credit rating. Every late payment reported by the credit card company lowers your credit rating even more.
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