July 16, 2025 · 12 mins read
Santhosh Kumar
A credit card default happens when you fail to make any payment toward your credit card's outstanding bill for a long period of time. Even if you fail to make the minimum payment towards your credit card for about 6 months in a row, you may be put on the defaulter list, and your credit card account would be immediately deactivated.
Whenever you accept a credit card, you agree to certain terms and conditions, including making your minimum payment by the due date listed on your credit card statement.
When you miss the minimum payment by 6 months or more in a row, your credit card will be in default. In such situations, your credit card issuer will first send several notices via email or SMS and call you asking to make the payment. If you do not make the payment after a stipulated period, they will close your account and report the default to the credit bureaus.
This period may vary from one credit card provider to another. This tends to impact your credit score, and it will be difficult for you to get approved for loans in the future. Once you are listed as a credit card defaulter, you become a risk for any credit obligation.
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The many consequences of a credit card default are listed below-
Your credit score will be affected if your payments are defaulted. This is because credit rating agencies regularly receive reports about your payment history.
Banks and credit card companies tend to blacklist people who fail to make payments towards their credit cards.
The bank will block your credit card in order to prevent any further transactions from the card. You will not be able to swipe the card to make any purchases. Until all the dues are settled and the bank is convinced, the card cannot be used again.
Legal action can be taken in case of credit card payment default. This can be made into a civil dispute, and the case can be filed in the court of law.
Since your name will be blacklisted, it will be difficult for you to get approved for loans or any type of credit in the future.
If you have repeatedly missed your payment due dates, the credit card interest rates will be significantly higher.
This is the worst possible scenario and happens only at the last stage. If the bank has access to your savings bank account or other accounts, funds can be used towards the outstanding bills. Apart from this, some banks may also seize properties owned by you to settle the dues.
Usually, banks tend to give some leverage and time to pay the bill. This can extend anywhere between 60-90 days, depending from bank to bank. If no payments are made even after this period, the case will be forwarded to the bank's recovery house. Recovery agents will then approach you and ask to settle the bills at the earliest.
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When you opt for a credit card, you sign up for various terms and conditions as laid out in the official joining documents by your bank/credit card issuer. One such condition states that you will pay all your credit card bills by the due date as listed on your credit card statement. If you fail to do so, your bank will send you warnings/notices for 6 months on a regular basis.
However, if you still don't act upon clearing your pending dues, your credit card account will be deactivated and will be reported to the credit bureaus. This will harm your credit score majorly. Hence, to avoid landing in such a situation, you must first be aware of the reasons that may make you a credit card defaulter and stay away from those practices.
Expenditure– There may be situations when you would spend an excessive amount considering your credit limit. However, you might not be able to repay the amount even when you receive your salary (this would certainly happen because you spent more than you earn). Hence, it is advised you should only spend more than 60% of your credit limit in order to be able to repay the amount later.
Postal delays– If you haven't opted for online receipt of your bills, then your bank will send your bills to your residential address by post. In such cases, there is a high chance that your bills may get misplaced or delayed in reaching you. This would eventually lead to late credit card payments. Hence, it is recommended to turn on your online notifications and to keep a regular check on your email for your credit card overdue.
Procrastination– A lot of people tend to wait till the last minute to pay their bills. While it makes no difference if you pay it before your due date, it is always a better idea to make the bill payments well in advance. This helps you stay away from the risk of missing the bill payment and leaves no chance of being liable to pay heavy interest charges for late credit card payments.
Missed Due date– Even though it is less likely to happen, there may be a few instances where you would get confused with your due date and eventually miss the payment of your credit card bills. Hence, it is advised that as and when you receive your monthly statement, you take a deeper look into the billing date and payment due date and set reminders accordingly.
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Number of Missed Credit Card Payments: 1-2 Consequences: 1: Late fee 2: Penalty APR 3: Loss of introductory APR 4: Negative impact on credit score
Number of Missed Credit Card Payments: 3 Consequences: 1: Late fee 2: More damage to credit score 3: Closed credit card account
Number of Missed Credit Card Payments: More than 3 Consequences: 1: Late fee 2: Substantial damage to credit score 3: Debt sold to collection agency 4: Lawsuit
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Any of the above reasons might make you go through the consequences of a credit card defaulter, even if you did not intend to follow such practices. Hence, you must be aware of the consequences that you would have to bear if you become a credit card defaulter so as to stay aware of your bills well in advance-
Negative impact on credit score– Making late credit card payments or having missed payments leads to a lower credit score, which cancels out the major benefit that a credit card has to offer. Your credit score can be improved by effective usage of your credit card and timely repayment of your bills. It is necessary to have a good credit score in order to ensure that you are eligible for higher loans in the future. Not paying your bills in time will eventually hamper your financial health.
Blocked Credit Card Account– Not paying your credit card bills for a maximum of 6 months will make you a credit card defaulter. You will be blacklisted from the bank, which, in turn, will block your credit card account.
Legal implications– Not paying your credit card bills for a very long time will indicate that you are a fraud. As a result of this, banks might take legal action against you, and it will become difficult for you to take credit from anybody in the future.
High interest rates– Upon non-payment of the credit card bills by more than 60 days, the credit card companies charge interest rates as high as 30% of the credit card overdue. This high interest rate is also applied to the new purchases that you make using your credit card. If you continue doing this, in almost no time, the interest on your credit card bill will be more than your actual credit card bill!
Interest on outstanding balances– Contrary to what most credit card holders think, you are not liable to pay only the minimum amount due out of your total credit card bill before the due date. Even though it is widely believed that paying only the minimum credit card balance would not make you liable for interest charges, this is not true. In reality, you will be paying interest on the outstanding amount starting from your due date. Hence, it is strictly advised that you pay your credit card overdue in full.
Asset Acquisition– As a result of non-payment of pending dues, banks will have the right to use funds available in your savings or other accounts to clear your outstanding balances. In worst cases, banks may also seize your properties/other assets to settle the dues.
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Credit card payments can have a major impact on your financial health; hence, they must be taken very seriously. Listed below are a few basic habits that you should inculcate in your financial routine in order to avoid late credit card payments and stay away from the consequences of credit card defaulters-
1: Sign up for the auto-pay feature on your credit card's mobile application/online portal. Set up timely reminders for your due dates
2: Do not wait until the last minute to pay your credit card overdue
3: If you are really short of finances, then pay at least the minimum amount due before the last date. The remaining balance can be paid in the interest-free period
4: You may take a personal loan if you have reached a stage where paying your credit card dues does not seem possible to you, as these loans have lower interest rates
5: You can request your bank to convert your outstanding balance into easy, affordable EMIs, which you can pay over a specified period of time
6: As an alternate, you may also transfer your credit card balance to another bank’s account and pay the sum through regular EMIs
7: If, unfortunately, the situation has become worse for you, you may file for bankruptcy, which will allow you to restructure your debt and make it more affordable for you
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Below listed are some of the ways to deal with credit card default-
Pay the account in full- This is the easiest and recommended way to save yourself from credit card default. Pay all your dues, and your credit score will also gradually recover.
File for bankruptcy- Depending on the extent of the default and any other debts you are holding, you can consider filing bankruptcy to either restructure your debt and make it more affordable or to have it discharged.
Credit Card Balance Transfer– You can transfer your balance to the account of another bank and pay through EMIs
Take a Personal Loan- You can also take a personal loan to pay off your debts. The loans come at lower interest rates than the interest charged on the credit cards.
Convert the due amount into EMIs- Request the bank to convert the due amount into EMIs, which you can pay over a limited period of time.
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If you don't pay your credit card bill, you will have to pay late fees and increased interest charges, and it can cause damage to your credit score. If you continue to miss payments, your card can be frozen, your debt could be sold to a collection agency, and the collector of your debt could also sue you.
Legal action can be taken in a court of law for credit card payment default, and a civil suit can be filed. Your name will also be a part of the credit card defaulter list in India.
You will be charged a penalty for late payments. Even with a single-day delay, you will have to pay interest on the outstanding amount along with a penalty for late payment. These annual interest rates (also known as APR) on credit cards may range between 30% and 45%.
Credit card companies sue for non-payment in about 15% of collection cases. Usually, debt holders only have to worry about lawsuits if their accounts become 180 days past due and charge off or default. That's when a credit card company writes off a debt, counting it as a loss for accounting purposes.
Credit card companies rarely forgive your entire debt, but you might be able to settle the debt for less and get a portion forgiven.
Cards that were used or that are suspected of having been used in fraudulent transactions are compiled in a database, and after having been blacklisted, they will always be subject to rejection by the system. The purpose of blacklisting is to prevent fraud and losses for the banks.
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