Americans Not Paying Bills on Time — and Why That’s Bad

Paying your bills on time can save you money and stress. When you pay a bill by the monthly due date, you avoid late payment fees, penalty interest rates, potential damage to your credit scores and more. 

Yet, many Americans struggle to get their bills paid on time. In a 2024 survey, 37% of adults said they had missed at least one payment on a credit card, utilities or even rent in the prior year. If you’ve fallen behind on a bill, or you think you may fall behind soon, here’s what you can do to prevent damage and recover sooner.

What happens if you pay your bills late?

Late payments can result in a variety of consequences, and some of them are swift!

Depending on the type of bill, paying just one day late could result in a late fee. For credit cards, you can also have your interest rate increased. After being just three days behind on rent, your landlord can start the eviction process in some states. 

Once your payment on a non-collections debt account (most open loans and credit cards) is 30 days late, the missed payment will appear on your credit reports and stay there for seven years. If you fall behind by roughly four months, the creditor will likely sell the debt to a collection agency, causing more damage to your credit.  

For loans where you have collateral, such as car loans and mortgages, the lender will likely begin the repossession or foreclosure process after three missed payments.

How do late payments impact your credit?

Credit card and loan payments that are 30 days late will be reported as “missed” on your credit reports. As a result, your credit scores can take a major hit.

How many points will you lose with one missed payment? It depends on a variety of factors, but the higher your scores are, the more they’ll drop. And as your credit scores decrease, you’ll find it more and more difficult to get approved for the following:

• Loans and credit cards
• Utility accounts, including cellphone plans 
• Affordable car insurance
• New apartments

Payment history is the most important factor in your credit scores, so the best way to make improvements to your scores is to pay your debts on time each month.

What should you do if you can’t pay a bill?

If you’re afraid you’re going to miss a bill payment, it’s important to be proactive. Many creditors and utility companies offer hardship payment plans and other help for people who are facing financial emergencies. But you’re more likely to qualify for help if you contact them before you fall behind.

If hardship assistance isn’t an option, consider these other solutions and strategies:

• Ask a friend or family member for a short-term loan to help you cover the cost.
• Check to see if the creditor will change your monthly due date.
• Sell personal items such as workout equipment or jewelry to come up with the money.
• See if you can qualify for an emergency loan from a credit union.
• Talk to an NFCC-certified credit counselor to get professional input on your options.

If you’ve already missed a payment, but it was just a one-time thing, call the company. Ask if they’ll work with you to waive fees or remove the information from your credit reports due to your history of on-time payments. 

Unfortunately, there may not be an easy fix. When there’s no help available, all you can do is make your best effort to recover from the mistake. That might include anything from revisiting your budget, taking other steps to improve your finances, or simply setting a monthly reminder to pay bills on time.

When dealing with past late payments, it’s important to keep perspective. Negative information will eventually fall off of your credit reports, and over time it has less impact on your credit scores. You can also rebuild your credit scores and finances by taking action now to improve your budget and get back on track.