Debt Culture

Forty Six Million Credit Card Holders Expect to Miss A Payment

Cracks in the ‘financial foundations’ of many reveal mounting debt

New research from the consumer credit site wallethub.com. Reprinted with permission.

Forty-six million Americans (almost 1 in 5 adults) think they will miss at least one credit card due date in 2020, according to a new WalletHub credit cards survey released today. This indicates that cracks in the foundation of consumers’ finances are beginning to show, under the strain of mounting debt. The average American household already owes a near-record $8,700 to credit card companies. In light of that, WalletHub’s survey examined people’s experiences with late payments and their attitudes regarding the likelihood of future encounters.

Missing a credit card payment can start a chain reaction of negative events. First off, there are late fees of up to $29 for a first offense and $40 for another within six months. In addition, cardholders not already carrying a balance between months will lose their grace period, and interest will start accruing immediately on both new purchases and the unpaid balance.

There might also be a high penalty APR on new purchases, depending on the issuer, and this rate can be applied to all balances after the cardholder is 60-days past-due on payment. Lastly, if the credit card issuer reports a late payment to the credit bureaus after it’s 30 days late, it will cause damage to the cardholder’s credit score. This can lead to higher costs and fewer borrowing opportunities in the future.

Key Stats

Credit card issuers are forgiving…if you ask nicely
Nearly 9 in 10 people who have tried to get a credit card late fee waived were successful. Women are 18 percent more likely to have tried to get a fee waived than men but are also 2 percent less likely to have been successful.

Payment priorities change with age
People aged 18 to 44 are most worried about missing credit card payments. The 45-59 demographic is most concerned about their mortgage, while those over 59 put tax payments as their biggest worry.

Luxury can lead to lapses
People with high income are almost twice as likely to miss a payment due to forgetfulness as people with low income.

The reason that roughly 46 million people expect to miss at least one credit card due date in 2020 is that we’re stretched too thin – in terms of both time and money...

Men and women react differently to fees
When asked about their attitudes toward getting a late fee, women are 39% more likely than men to feel “punished.” Men are twice as likely to feel “indifferent.”

A copy of the full report can be found at here.

Q&A with WalletHub CEO Odysseas Papadimitriou

Why do so many people expect to miss credit card due dates in 2020?
“The reason that roughly 46 million people expect to miss at least one credit card due date in 2020, according to WalletHub’s latest credit card survey, is that we’re stretched too thin – in terms of both time and money. U.S. credit card users started 2020 with more than $1 trillion in credit card debt. Up until this point, we’ve managed to keep our accounts in good standing at historical rates. However, expecting to miss due dates is a sign of cracks in the foundation. And not only do 18% of people expect to miss at least one credit card due date in 2020, but 30% us say that not having enough money is the reason we’re most likely to be late.”

What are some tips for credit card users concerned about late payments?
“The easiest way to avoid late payments, and the fees and credit score damage that can accompany them, is to set up automatic monthly bill payments from a checking account for at least the minimum amount due each month. This will at least remove forgetfulness as a potential cause. Automated payments won’t do much good if you don’t have enough money in your bank account, however. So careful budgeting and saving are key, too.”pullquote]

Is it worth asking credit card companies to waive late fees?
“Credit card users who almost always pay their monthly bills on time but fail to do so once in a blue moon should definitely try to ask their credit card company to waive any associated late fee. It really can’t hurt, and 9 in 10 people who’ve tried in the past say they’ve been successful at least once, according to WalletHub’s new credit card survey. This is actually one reason why credit cards that emphasize ‘no late fees’ as a feature are sometimes overrated. You might get that on other cards, anyway, just by asking. Plus, ‘no late fee’ often actually means no fee the first time you miss a due date. After that, all bets are off.”