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Delinquent Credit Card Debt – One Cycle Is All It Takes to Begin the Spiral

Delinquent credit card debt is like having mold in your house. As time passes, they both silently get worse and become more difficult to fix.

When you make a payment after the due date on your credit card statement, you have a delinquent credit card account on your hands. You might think that one missed payment doesn’t matter. In fact, many people seem to believe this.

According to the National Foundation for Credit Counseling 2018 Consumer Financial Literacy Survey, 25 percent of Americans said they didn’t pay their bills on time. While it’s heartening to know that 75 percent do pay their bills on time, the 25 percent who don’t are on the way to ruining their credit. One missed payment can escalate into a collection account if you don’t take steps to fix it.

Unfortunately, there’s an upward trend in credit card delinquencies, according to data from the St. Louis Fed. In 2009, delinquencies peaked at 6.77 percent during the recession. By the end of 2015, delinquencies dropped down to 2.16 percent. At the end of March 2018, delinquencies were up to 2.54 percent.  While this is still relatively low, it is a cause for concern.

If you miss a payment, hop into action right away. Read on to find out what to do if you have a delinquent credit card account.

The Different Degrees of Delinquency

Delinquency is measured in days. Here is the timeline and the likely impact on your credit report:

Less than 30 days late.

This is the most important date in the delinquent timeline. You’ll get hit with a late fee, but if you’ve been an excellent cardholder up until now, you can call and ask for the fee to be removed.

If you make your delinquent payment before you’re 30 days late, it will not show up as a delinquent account on your credit report. So even though your account is technically delinquent, all the really bad stuff hasn’t happened yet.

I almost hate telling you this, because I don’t want you to think you have a “cushion” and then get sloppy. Your due date is your due date. Don’t live on the edge of that cliff, because you might fall off and get hurt.

30 to 59 days late.

Now, you’re flirting with possible disaster. Your account will be reported to all three credit bureaus as delinquent. Oh, and you’ll get another late fee. Once you’ve missed paying your bill for an entire cycle, it’s hard to explain it away when you talk to your issuer.

When this goes onto your credit report, it stays for seven years. But you can take steps now to limit further damage. Reach out to your credit card company and ask for a hardship plan. You can negotiate for a break, which might include a lower annual percentage rate, a payment plan or skipping a payment for one month, among other things.

60 to 89 days late.

You’ll likely be hit with another late fee, and now your account is reported as 60 days late to the bureaus. See how this keeps getting worse?

Time is running out, but you can still call your issuer and talk about how you can remedy this situation. You can’t get it off your credit report — unless it’s inaccurate — so focus on negotiating for better terms and maybe even getting a reduced balance to pay.

90 to 119 days late

You’re on a runaway train, but it’s still not too late to avoid the train wreck ahead. Bad things are happening at this point. You’ll have another late fee, your credit report now shows a 90-day delinquent account, and your balance is increasing due to the evil nature of compound interest.

Call your issuer today. The credit card company is already making plans to transfer your account to a debt collector if you don’t pay before you’re 120 days late. Let your issuer know you want to work out a payment plan and make things right.

120 days or more late.

OK, this is the train wreck of credit card problems. Your account will probably be transferred to a debt collector, and that will be reported to the credit bureaus. You’ll now have a collection account on your credit report.

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