Your Credit Card Payment Failed. What Happens Next?

A failed or "bounced" credit card payment is more than a simple mistake. It triggers immediate penalties and can hurt your finances for years. First, you will face fees. Your card issuer will charge a late payment fee, often up to $40. Your bank may also charge a non-sufficient funds (NSF) fee for the rejected transaction. Your interest rate will likely rise. Card issuers can apply a penalty annual percentage rate (APR). This higher rate, sometimes nearly 30%, applies to your existing balance and new purchases. The most severe damage is to your credit score. Payment history is the largest factor in your score. A payment reported as 30 days late can lower a good score by over 100 points. This record stays on your report for seven years. If you miss a payment, act quickly. Pay the minimum due immediately. Then, call your card issuer. If you have a good history, they may waive the fee and reverse the penalty APR. Explain your situation honestly. To avoid this, set up automatic minimum payments. Monitor your payment due dates and bank balance closely. One bounced payment can have costly, long-term effects.