What happens if you can’t pay your credit cards?

Credit cards are a fast way to borrow money. According to figures UK households have £15,385 on credit cards as of 2019, with each home owning £886 on average than it did twelve months ago. 


However, with the average credit card interest rate at 19.24 per cent in January 2019, the overall amount a household owes could quickly build up if they don’t clear their balance in a reasonable period. Moreover, if borrowers can’t keep up their repayments, then they could find themselves experiencing debt problems.


However, what happens if someone is unable to repay an unsecured debt like credit cards? 


What happens if you don’t pay your unsecured debts? 

Unsecured debts include any debt that is not secured against an asset, like your home or your car. Typical unsecured debts include personal loans, store cards, overdrafts, catalogues and credit cards.


Unlike secured loans, a lender cannot take a borrowers home or car or another asset if the borrower does not repay their unsecured loan. 


However, although non-repayment of unsecured debts are not as severe as non-repayment of secured debts, not making the agreed repayments towards credit cards can still have a significant impact.


The most severe consequences for not paying your credit cards are:


  • Increased fees from the credit card provider
  • Severely damaging your credit rating as your credit report will display late or missed card payments 
  • A creditor could take you to court, and you could be issued with a County Court Judgement (CCJ), that orders you to pay the debt
  • You may have to deal with debt collectors
  • Bailiffs may be utilised to attempt to obtain possessions that can be sold off to settle your debt


It is crucial then to ensure you repay your monthly credit card repayments. 


How you can ensure you always pay your credit card debts

Missing credit card payments can have detrimental consequences. So, borrowers must make at least the minimum payment required each month. Here are several tips to aid you:


  • Examine your income and outgoings – calculate how much money you have spare each month to ensure there is enough to cover paying your unsecured debts
  • Ensure you know when your payments are due – set reminders, so you know when your repayments are due. Alternatively, and even better, set up a direct debit for the minimum credit card repayment so that this is repaid. Thus avoiding further charges for late-payments and not paying the minimum payment. 


  • Reduce your monthly outgoings – cut back on spending to free up money to meet the credit card payments each month. Reducing your monthly outgoings could include eating out less, not buying takeaways, switching utility providers, lowering your mobile phone tariff or cancelling payments that are not critical.


  • Consider taking out a debt consolidation loan with a reputable financial lender like a high street bank. Should you have an adverse credit history, then a direct lender could help you find some cash fast. Beware though – once you have paid off the debts with the loan, don’t create further debt and miss any loan repayments.


If these tips still do not help you to repay your credit cards each month as agreed, then you should obtain some professional debt advice as soon as possible. 


The Citizens Advice Bureau, Money Advice Service and the debt charity Step Change can help you formulate a solution, whether an Individual Voluntary Arrangement (IVA) or considering the possibility of bankruptcy.


About the author

David Bailey-Lauring is a single father of three boys so he knows what it takes to stretch a budget when it comes to family finances! David is a small business entrepreneur and regularly writes about entrepreneurship, tech, sports and personal finance in the UK, USA, and Europe.