Families in Oregon have many demands on their income. A credit card debt analyst at NerdWallet explained that the rising costs of housing, food and health care continue to strain budgets and sometimes lead to missed credit card payments. Research from the Federal Reserve Bank revealed that in 2017 people paid other debts, like mortgages and student loans, before their credit card bills. When money gets tight, people will skip payments on their credit cards.
A single missed payment, however, triggers a late fee that gets added to the outstanding balance that is accruing interest. When an account becomes delinquent by more than 60 days, the credit card issuer will likely impose a penalty APR. What might have been a 15 percent rate on a credit account could jump as high as 29.99 percent. This huge increase ramps up costs for the borrower who is already struggling. A $3,000 balance at 29.99 percent will result in $761 in interest costs over 18 months. At 15 percent, that same balance would only accrue $368.
Those missed or late payments will also prompt the lender to report the delinquency to all the credit bureaus. This lowers credit ratings for the debtor. Just one missed payment could take 100 points off of a credit score. Lower credit scores make obtaining new loans difficult and could prevent people from even getting approved to rent an apartment.
Although falling behind on payments could paralyze a person with stress, taking action as soon as possible is the best move. Negotiations with a credit card company might provide a chance to catch up. If debts become insurmountable, an attorney familiar with bankruptcy could determine a client's options for discharging credit card debt or setting up a manageable payment plan.