Credit cards are a convenient payment method that can be used for everyday purchases, utility bills, and more. However, because of their convenience, it’s not uncommon for people to forget payments or struggle to make payments due to insufficient funds.
Even a single missed payment can result in late fees, suspension of card usage, and most importantly, damage to your credit report. If delinquency continues, the situation may escalate to forced account cancellation, demands for full repayment, or in the worst case, legal action such as asset seizure.
In this article, we’ll explain in detail the risks associated with credit card delinquency, how to respond if you fall behind, and what steps you can take to prevent missed payments. By understanding these risks, you can use your credit card with confidence and avoid serious financial trouble.
What Happens If You Fall Behind on Credit Card Payments?
If you miss credit card payments, a series of escalating problems may occur. Below are some of the most common issues that arise once delinquency begins.
Suspension of Credit Card Usage
If payment is not made by the due date, the credit card company will first contact you to request payment. If payment is further delayed, your card may be temporarily suspended, preventing you from using it for shopping, bill payments, or subscriptions. This can also disrupt services that rely on automatic credit card payments, such as mobile phone bills or streaming subscriptions.
Accrual of Late Fees (Delinquency Charges)
Once you miss your payment, late fees start accruing from the day after the due date. The annual interest rate for late fees is typically between 10% and 14.6%, meaning the longer the delay, the higher the total amount you owe. Even a delay of a few days can result in additional charges, so it’s important to act promptly.
Negative Impact on Your Credit Report
When you fall behind on credit card payments, this information is reported as a delinquency record to credit reporting agencies. This data is shared with other financial institutions and may affect your ability to apply for new credit cards, obtain mortgages or auto loans, and pass financial screenings for rental housing or other contracts. Once your credit report is damaged, the record can remain for several years, hindering your access to financial products and services.
Forced Cancellation and Lump-Sum Payment Demands
If delinquency continues, your credit card company may proceed with forced cancellation of your account. At that point, the full remaining balance will be immediately due in a lump sum, even if you had previously arranged installment or revolving payments. This creates a much heavier financial burden.
Risk of Asset Seizure
If you ignore the credit card company’s contacts and payment demands for an extended period, the matter may eventually escalate to legal action. You may receive court orders or lawsuits, and if you continue to ignore these, your wages, savings, or personal property may be seized to cover the unpaid debt. That’s why it’s crucial to take action as early as possible to avoid these serious consequences.
How to Handle Credit Card Delinquency
If you fall behind on your credit card payments, it’s important to take appropriate action as soon as possible. Here are the key steps you should take if you find yourself in this situation.
Contact the Credit Card Company Immediately
If you miss a payment, your priority should be to contact your credit card company directly. By reaching out proactively, you show your willingness to resolve the issue, and you may be offered alternative repayment options such as rescheduled withdrawals or payment plans. If you fail to contact the issuer, it may be interpreted as a lack of intent to pay, which could lead to stricter measures. Early communication is critical.
Pay the Outstanding Amount Promptly
If a new withdrawal date has been scheduled, make sure to deposit the necessary funds into your account by that date. If no automatic reattempt is scheduled, you will need to transfer the payment directly to the account specified by the credit card company. Since procedures may vary by company, be sure to carefully follow the instructions you receive.
Review Your Repayment Options
If immediate payment is difficult, you may consider converting your balance to revolving payments (revolving credit) or installment payments. By spreading payments over time, you can ease your monthly financial burden. However, since both options involve fees and interest, it’s important to create a realistic repayment plan to avoid falling further behind.
Explore Other Funding Sources
If your payment issue is temporary, you may consider alternative sources of funds, such as government assistance programs or borrowing from family members or trusted friends. Additionally, some credit card companies offer special loan programs or temporary payment deferral plans. When facing financial difficulties, it’s important to calmly review all available options and select the best one for your situation.
How to Prevent Credit Card Delinquency
In many cases, credit card delinquency can be prevented through a few simple habits and preparations. Below are some practical strategies to help avoid falling behind on your payments.
Regularly Check Your Card Usage and Account Balance
Many missed payments are caused by simple oversights or insufficient funds.
By regularly checking your credit card activity and account balance, you can prevent payment delays. Most credit card companies offer apps or online statements that allow you to monitor your spending in real-time.
Set Payment Reminders
To avoid forgetting your payment due dates, set reminders on your smartphone calendar or reminder app. If you have multiple credit cards, it's important to organize and track the due dates for each card to ensure timely payments.
Use Automatic Transfers and Deposits
If your salary account and credit card payment account are different, you can set up automatic transfers to ensure funds are available before the payment date.
Transferring the necessary amount in advance helps prevent insufficient balance issues on the withdrawal date.
Adjust Payment Timing with RentEase
If you don’t have enough funds by the payment deadline, services like RentEase can help you adjust the payment schedule using your credit card.
By using RentEase, you can pay rent or fixed costs with a credit card and delay the actual bank withdrawal until your salary is deposited. This is especially useful for managing sudden expenses or cash flow timing.
Keep Track of Your Spending and Avoid Overspending
Managing your credit card usage according to your monthly income is essential to avoid delinquency. Avoid increasing your credit limit unnecessarily and set a reasonable spending cap for yourself. Review your credit card usage regularly, especially at the end of the month or before the billing cycle closes, to stay aware of how much you've spent.
When You Still Can’t Pay — Last Resort Options
Even with careful planning, there may be times when it becomes financially impossible to make your credit card payments. In such cases, it's important not to delay and to seek assistance from support programs or professional advisors as early as possible.
Consider Debt Consolidation or Debt Relief Programs
If your financial difficulties are long-term, you may consider debt relief options such as debt settlement (voluntary settlement), civil rehabilitation (personal rehabilitation), or personal bankruptcy. By consulting with a lawyer or judicial scrivener, you may be able to reduce your repayment amount or eliminate interest charges.
However, please note that once you undergo debt relief procedures, this information will be recorded with credit bureaus, making it difficult to obtain new loans or credit cards for approximately 5 to 10 years.
Consult a Professional Organization
If you're struggling with payments, don’t try to handle everything alone — seek advice from a professional organization. For example, organizations such as the Japan Credit Counseling Association (JCCO) and the Japan Legal Support Center (Houterasu) offer free debt counseling services. They can assist you with restructuring your repayment plan and provide legal support if necessary.
Utilize Public Assistance Programs
If your financial difficulties are due to temporary income loss or unemployment, you may be eligible for government support programs provided by local municipalities. These may include housing security benefits or welfare loan programs. These programs can provide assistance with rent and living expenses and may indirectly help you stay current with your credit card payments.
It’s important to research available programs early and apply if you qualify.
Summary
Credit card delinquency is a problem that can happen to anyone. However, leaving it unaddressed may lead to serious consequences such as suspension of card usage, late fees, damage to your credit history, and in the worst case, legal action or asset seizure.
The most important thing is to act immediately when you find it difficult to make a payment. There are many possible solutions, including contacting your credit card company, changing your payment plan, and utilizing public assistance or support services.
To prevent delinquency in the first place, it’s essential to regularly monitor your credit card usage, check your account balance, and set reminders for payment deadlines. Since credit cards operate on “trust,” responsible usage is the key to maintaining your creditworthiness.
If you are facing temporary cash flow difficulties, using services like RentEase can also be an option to adjust your payment schedule. This allows you to complete your payments without damaging your credit history while reducing the immediate financial burden.
Having the right knowledge and the ability to take action in advance will help protect both your credit and your financial stability.
