3 Consequences of Abandoning Credit Card Debt You Never Knew About

3 Consequences of Abandoning Credit Card Debt You Never Knew About

Consequences of abandoning credit card debt

Consequences of abandoning credit card debt

Anyone who has followed the blog over the past few years knows I’m no stranger to letting things fall into collections (and later having to pay back WAY more than I owed). I’m not proud to say it has happened to me on several occasions now. If you are thinking about letting some of your debts go, you should be fully aware of the consequences of abandoning credit card debt before you do.

The Consequences of Abandoning Credit Card Debt

As mentioned above, I have abandoned debt in the past. Eventually, I wound up having to pay it off to further myself in life and on our debt-free journey. However, many people don’t consider the consequences of ditching your debt that way.

For me, abandoning my credit card debt meant paying way more than I’d originally owed. One credit card I stopped paying on when I owed $500. In the end, after settling with a collections agency, I wound up paying nearly twice that.

1. Your Interest Rate WILL Start to Climb

Before your debt is handed off to a collections agency, the credit card company will try and work with you. They give you about 60 days before it is reported. As soon as you miss a payment though, your interest rate will begin to change.

Your current interest rate is only because you’ve made payments on time and consistently. The first time you miss a payment, they’ll be watching your account and your credit score. Changes in either will likely increase your interest rate.

2. Paying The Debt Back Will Be Close to Impossible

Once that bigger interest rate kicks in, it can be close to impossible to pay back through the credit card company. This is a big reason why so many people choose to abandon their credit card debt. Even once the debt is passed on to collections, the amount is so much more than you initially owed it can be overwhelming.

The best piece of advice anyone can give you if this is how you’re feeling is to call and talk to the credit card company. They may put a hold on the account until it is paid off, but it won’t go to collections and it won’t have as big of an impact on your credit. Most places will work with you.

3. For The Next Seven Years, It Will Haunt You

And possibly longer! Depending on the statute of limitations on debt in your state, any credit card debt you ignore will stay on your credit report for seven years. In some states, it can even be as long as 10 years.

Having marks on your credit report like this can really prevent you from doing important things in life, like buying a home or even getting a job in some cases. Imagine it preventing you from having the credit needed to do these things for a decade!

In the end, it is best to just pay off your debt. Believe me, I learned the hard way. If you do need help or can’t pay your credit card debt right now, call the creditor and research your options. The worst thing you can do is act like it doesn’t exist though. You’ll pay the stiff consequences of abandoning credit card debt.

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