Credit cards provide a convenient way to purchase the things you need and want immediately. Keeping your credit card payments current is essential to maintaining a good credit rating and ensuring continued access to credit. Maintaining a zero balance and never using your credit cards will not improve your credit report or increase your credit score. Use your cards, but if you fall behind on your credit card payments, bad things can happen -- and not just to your credit score.
Should You Leave 20 Percent on Your Credit Cards Instead of Paying Them Off?
You may have heard that leaving a 20 percent balance on your credit card account improves your credit score. That's not true, but the principle behind this belief makes sense. Keeping your account active and making timely payments is what raises your credit score. If you consistently make small purchases on your credit card and always pay off the balance in full by the due date, the credit card company sees that you're handling credit responsibly and reports your good record to credit-reporting agencies.
Can You Get in Trouble for Not Paying Your Credit Cards?
There's no doubt that blowing off your credit card bills is not smart. If you can't pay all your bills, try to negotiate an arrangement that lets you delay payments or make smaller payments. If that doesn't work, credit card companies can't threaten to take your house or accuse you of breaking the law. That's a violation of the Fair Debt Collection Practices Act. However, in extreme cases, credit card companies can obtain a judgment against you. When that happens and you receive a summons to appear in court, you risk having an arrest warrant placed against you if you don't show up.
Does Paying Off Credit Cards Every Month Improve Your Credit Score?
As long as you pay off your credit card balance in full every month, using credit cards is like getting an interest-free loan. That doesn't mean that you should max out your cards every month. Even if you always pay off your credit card bills in full, the balance your credit card company reports to the credit-reporting bureau may not be zero. If the date that your credit card company makes its report to the credit-reporting bureau occurs before you pay your bill, it could appear as though you've maxed out your credit.
Does a Surviving Spouse Pay the Credit Card of the Deceased?
You may wonder if your spouse will have to pay your credit card debts if you die without paying them. In most cases, the answer is no, if the accounts are listed in your name alone. However, if you have joint credit card accounts with your spouse, then your spouse would be equally liable for paying the bills. Likewise, if you live in a community property state, your spouse may have to pay your credit card bills if you die and leave them unpaid. Whether or not you named your spouse as executor of your estate, paying your credit card balances and other financial obligations from proceeds gained from your assets is included among the tasks of guiding your estate through the probate process.
Can a Credit Card Sue a Customer for Not Paying?
Credit cards are usually considered unsecured debt, which means that credit card companies can't take your house or car if you don't pay the bill. However, if you make no attempt to pay your bill for several months or longer, credit card companies may eventually take you to court. If that happens and you don't show up, or if you show up and the judge rules against you, your credit card company may obtain a judgment. When that happens, credit card companies may place a lien against your house or other assets or garnish your wages.
- Bankrate.com: Tiny Card Balance Helps Credit Score
- Experian.com: Use Cards a Little and Pay Balances in Full to Build Credit
- Federal Trade Commission: Debt Collection FAQs -- a Guide for Consumers
- Illinois Legal Aid: Can You Go to Jail for an Unpaid Debt?
- Bankrate.com: Paying in Full Won't Improve Credit Score
- Federal Trade Commission: Paying the Debts of a Deceased Relative -- Who Is Responsible?
- Bankrate.com: Is Wife Responsible for Deceased Husband's Debt?
- Bankrate.com: Community Property, Common Law, Assets and Debts
- Bills.com: Am I Liable for My Deceased Spouse's Debts?
- Bankrate.com: Debt, Collection Agencies and Your Rights
- Discover.com: How Credit Cards Work
- Federal Trade Commission: The Fair Debt Collection Practices Act
- Federal Trade Commission: Knee Deep in Debt
- MSN Money: How Not to Pay Your Bills
- U.S. Department of Labor: Wages and Hours Worked -- Wage Garnishment
- Bankrate.com: Cancel a Card, Hurt Your Credit Score
- The Motley Fool: Five Ways to Ruin Your Credit
Chris Blank is an independent writer and research consultant with more than 20 years' experience. Blank specializes in social policy analysis, current events, popular culture and travel. His work has appeared both online and in print publications. He holds a Master of Arts in sociology and a Juris Doctor.