People miss credit card payments for many different reasons, but the most common are forgetting and not having enough money.
The national survey of 1,000 adults found that 42 percent of all cardholders have neglected at least one card payment. The most common reason was forgetting (60 percent), followed by not having enough money (35 percent), being too busy (13 percent) and traveling (11 percent). A tiny portion of respondents (1 percent) said they missed a payment because their cards didn’t charge late fees.
“People miss payments for a variety of reasons,” said Thomas Faupl, a financial therapist and former credit counselor. “One is that they may not have financial literacy skills on some level. They’re not organized around their finances or they’re not aware of their cash flow – and then a payment is due, and they don’t have the money.”
Women (48 percent) were significantly more likely than men (35 percent) to say they had missed at least one payment. Conversely, men (65 percent) were more likely than women (52 percent) to report never having been late on a card payment.
Here’s what else our poll found about late credit card payments:
- Late payments are not a one-time thing. The most common frequency of missing a payment was once (18 percent), but 17 percent said they had skipped one two to four times, and another 7 percent said they had five or more overdue payments.
- Work-related stress could be a factor. Cardholders with jobs (46 percent) were more likely than the unemployed (34 percent) to say they missed a payment at least once.
- Less education means more slip-ups. People with high school or some college education were more likely to say they had neglected five or more payments than consumers with college degrees. Cardholders without college diplomas also were more likely to say they skipped a payment because they didn’t have enough money.
- Millennials’ missteps stem from money woes. More than half of cardholders aged 18-37 said they paid late because they were short on cash – more than any other demographic group.
- “Taking a year off” may include avoiding bills. Unemployed cardholders (17 percent) were significantly more likely than those who work (9 percent) to say they made a late card payment because they were traveling.
The online survey of 1,000 adults was conducted June 1-3, 2018. See survey methodology
Busy lifestyle, overspending can result in missed card payments
Missing a credit card payment can have several negative financial consequences. If you fail to make the payment within 60 days, the mistake is likely to be reported to the credit bureaus, which could send your credit score into a freefall. Additionally, your credit card issuer may hit you with a late fee and charge a penalty APR on your unpaid balance.
The price of paying late is high. But why is it so easy to slip up nowadays, given all the tools we have to help us stay on top of our credit card bills? Most major issuers offer online banking, which typically features email reminders and text message notifications that can help you remember to pay on time.
Still, 60 percent of cardholders who paid late said it happened because they just plum forgot. Experts say a busy lifestyle could be to blame for spacing on a card payment.
“I think sometimes people who are raising a family and going to work every day get disorganized around their finances,” said Faupl. “Other families have somebody who’s a strong [money] manager, and really stay on top of it.”
More than a third of credit card users said they failed to pay on time because they didn’t have enough money.
“I talk to people every day who are struggling with their finances,” said John Schmoll, a personal finance expert who runs a website called Frugal Rules. “Maybe they’re in a job that’s not paying them as much as they need to make, or they’re just simply overspending.”
Wage gap, male ‘bravado’ could explain late payments gender disparity
Our survey shows that women are more apt to miss credit card payments than men, and experts believe economic factors could play a role. Although the U.S. gender pay gap has narrowed in recent years, women still earn 82 percent of what their male counterparts make, according to an April 2018 report from the Pew Research Center.
“There are so many single mothers who are particularly poor,” said Maggie Baker, financial therapist and author of “Crazy About Money: How Emotions Confuse Our Money Choices and What to Do About It.” “Maybe their economic instability makes them unable to pay every single month.”
Baker said male pride also could explain why men are relatively unlikely to report having missed a card payment. And Faupl has observed that women tend to be quicker than men to ask for financial help.
“I wouldn’t be surprised if the bravado of the man would say, ‘Of course I’d never miss a payment,’” Baker said. “Maybe he hasn’t opened a bill and he missed the payment, but he’s not going to tell you that.”
Carrying a balance does not help your credit score
Fifty-seven percent of all respondents in our survey said they carried a balance on a credit card before. Of those, 49 percent did so because they didn’t have enough money to pay in full, and 32 percent wanted to free up cash or spread out their payments.
But another 22 percent fell prey to a persistent misconception – that carrying a balance helps your credit score.
Credit utilization – the ratio of the amounts you owe to your overall available credit limit – accounts for 30 percent of your credit score. The lower your credit utilization, the better your score will be. There is no credit scoring benefit to carrying a balance from one billing cycle to the next – it only increases the amount you have to pay as interest charges are then tacked on to the balance.
“I hear that myth all the time… but it’s never wise to carry a balance because you’re going to end up paying more for that in the long run,” Schmoll said.
However, some credit scoring experts say a 1 percent balance reported on a credit account can be better for your score than a zero balance. But in order to reap this benefit without it costing you extra in interest charges, you would have to find out exactly what day of the month your issuer reports to the credit bureaus, and then pay off the balance between that date and your billing statement’s due date.
What to do if you’re falling behind on payments
If you find yourself letting the occasional card payment slide because you’ve got too much to do or not enough money, there are ways to get back on track.
Faupl recommends writing down the due dates of every payment for which you’re responsible – not just your credit card bill, but also your mortgage or rent, utilities and other payments.
For those who sometimes find themselves short on cash when card payments are due, it might be time to put the credit cards away for a while.
“That is easier said than done at times, especially if you need a card to buy groceries or gas,” Schmoll said. “Even if you’re using it for something like that, look for another option. There is almost always going to be a better option than just putting it on plastic and hoping you’re going to be able to pay it.”
If you’re struggling to make ends meet or curb your card use, you can contact a nonprofit organization such as the National Foundation for Credit Counseling for help going over your budget or getting your credit card debt under control.
“People who get into financial trouble have to have the courage to ask for help,” Baker said. “The problem is the person feels so embarrassed that they don’t want to let anybody know, but they need to overcome that and reach out anyway.”
The study was conducted online in GfK’s Omnibus using the web-enabled “KnowledgePanel,” a probability-based panel designed to be representative of the U.S. general population, not just the online population. The study consisted of 1,000 nationally representative interviews conducted between June 1-3, 2018, among adults aged 18 and over. The margin of error is plus or minus 3 percentage points.
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