What Happens if I Can’t Pay My Credit Card Bills?

The Implications of Failing to Pay Credit Card Bills

In today’s economy, most individuals lean on credit cards for purchasing goods and services. However, it is not uncommon for individuals to find themselves unable to meet credit card payment obligations. This piece delves into what happens if you can’t pay your credit card bills, the benefits and pitfalls of credit card use, and solutions to such predicaments.

Credit Cards: The Upsides

Using credit cards for your transactions can offer several benefits:


Reward Programs: Credit cards often come with attractive reward points that can be redeemed for travel, gift items, cash back, among others.

Spending Tracker: Credit cards provide a detailed record of your expenditures, making it easier to track your spending habits.

Spending Limit: Credit cards come with a preset spending limit, which can help control impulsive spending.

Dispute Resolution: Disputing a charge on a credit card is often easier than reversing a transaction from a bank account.

Additional Perks: Some credit cards offer additional benefits such as extended warranties and insurance on purchased goods.

Enhanced Security: Using a credit card for shopping provides an extra layer of security by separating your purchases from your bank account.


When Credit Cards Turn Problematic

Despite the benefits, credit card use can also lead to financial turmoil. Below are some reasons why credit card bills can spiral out of control.

Loosened Qualification Criteria

Lenders are increasingly issuing new credit cards to consumers without stringent income verification or debt-to-income ratio assessments. This has led to an increase in the average credit limit for new cards, tempting consumers to spend beyond their means.

Multiple Credit Cards

As of 2023, there were over 76 million active Mastercard and Visa cards in Canada, with over 95% of adults owning at least one card. Managing multiple cards and their respective bills can be overwhelming, increasing the likelihood of missed payments.

High Interest Rates

Interest rates on credit cards can be considerably high. Consequently, if you carry a high balance on your card, a large portion of your payment could be applied to interest, hindering the reduction of your principal balance.

Late Payments

Failing to make minimum payments by the due date can lead to several complications:

Additional Charges

Late payments often attract fees, and some credit card companies may increase your interest rate significantly after two or more late payments within a year. These additional costs can further strain your ability to keep up with payments.

Credit Score Impact

Late or missed payments can negatively impact your credit score, especially if they are reported to credit bureaus after being 30 days overdue. Your payment history makes up about 35% of your credit score, meaning late payments can significantly affect your rating.

Collection Agencies

If your account is overdue by more than 90 days, your credit card company may sell or transfer your account to a collection agency. This can lead to increased calls attempting to recover the debt and can severely impact your credit score.

Seeking Assistance for Credit Card and Household Debt

If you’re grappling with overwhelming credit card and household debt, know that you’re not alone. With rising living costs and the aftermath of the pandemic, a significant number of Canadians are struggling to meet their financial obligations.

Companies like Bankruptcy Canada have a team of Licensed Insolvency Trustees that offer financial solutions if you’re overwhelmed by debt. By contacting them for a free consultation, you can take the first step towards a brighter financial future.

Find Your Personal Debt Relief Solution

Licensed Insolvency Trustees are here to help. Get a free assessment of your options.

Discuss options to get out of debt with a trained & licensed debt relief professional.