SoFi

Although the 16-digit number on your credit card might remind you of the routing number you see on your checks or bank statements, these sets of digits are not the same.

In fact, there’s no such thing as a credit card routing number, even if it was issued by a bank or credit union. The series of digits you see on the front or back of your card is your credit card number, and it provides important information about the credit card issuer, the card’s payment network, and you (the card holder).

Read on to learn more about the differences between a routing number and a credit card number and why credit cards don’t need routing numbers.

What Are Routing Numbers?

A routing number is a nine-digit number used to identify a specific bank, credit union, or other type of financial institution in the United States. The American Bankers Association created routing numbers in 1910 to aid in processing checks.

Routing numbers are still used today to help keep banking transactions secure, whether you’re making a direct deposit, an automatic bill payment, a wire or P2P transfer, or a phone payment.

Every bank has its own routing number — and some have more than one — that works kind of like a payment address. The routing number ensures the money from a financial transaction is correctly “routed” from one financial institution to another. Once the funds get to the proper financial institution, the money can then be moved into the designated bank account.

Recommended: Routing Number vs. Account Number

Where Can I Find My Routing Number?

If you still use paper checks and keep your checkbook handy, that’s probably the easiest place to look for your bank’s routing number. You should be able to find the routing number in the lower left corner of your checks.

The first nine digits are the bank’s routing number. After a gap, the next 10 digits are your account number. After another gap, the last few digits represent the number of the check you’re currently using.

You can also find your routing number by logging into your checking or savings account online. (If you have more than one account at a particular bank, your account numbers will be different, but the routing number for those accounts will likely be the same.) Or you can call your bank’s customer service line and ask for help getting the correct routing number.

Routing numbers can sometimes change, such as when two financial institutions merge, for example, or go through an acquisition. You should receive advance notice if that happens, but you may want to look just to be sure you’re using the most up to date routing number.

Why Don’t Credit Cards Have Routing Numbers?

A routing number is used to move funds between two bank accounts — from your employer’s account to your checking or savings account, for example, or from your checking account to the electric company.

When you use a credit card, you aren’t depositing or transferring money. You’re borrowing money, and processing that transaction works differently. That’s why there’s no routing number on a credit card.

Instead, the credit card issuer uses your credit card number to track your transactions and make sure they end up on your bill. The number also can help card processors identify the financial institution that will settle the payment when the card is used.

Recommended: Understanding Purchase Interest Charges on Credit Cards

What Do the Numbers on a Credit Card Represent?

It’s important to note that your credit card number is not the same as your account number. Your credit card number includes your account number, but it has a few more digits. And each of those digits has a purpose.

Every credit card number is unique: If you apply for a credit card and you’re approved, the card you receive will have its own number. But most cards use a similar, formatted sequence that can be used to identify the card issuer, the payment network, and the account holder:

•   The first number in this sequence typically represents the card’s payment network. Most credit cards start with a 3 (American Express), 4 (Visa), 5 (Mastercard), or 6 (Discover), as those are the major payment networks.

•   The next five digits complete the card’s Bank Identification Number (BIN), or Issuer Identification Number (IIN), and can tell you about the card’s “issuer.” (The credit card issuer is the financial institution that gave you the card and manages your account.)

•   The remaining digits — except, usually, the last digit — represent the cardholder and the account the card is connected to.

•   And finally, there’s the “checksum” or “check digit,” which is used by card issuers and payment networks to catch errors and help protect against unauthorized card use.

Though this format may differ a bit from one card to the next — some card numbers may have 15 digits instead of 16, for example — all card issuers must follow a set of standards created by the International Organization of Standardization (ISO) and enforced by the American Network of Standards Institute (ANSI). This allows consumers to use their card or card number no matter where they are in the world.

Does a Debit Card Have a Routing Number?

Although a debit card is typically tied to at least one bank account, it does not have a routing number. Each debit card has a unique 16-digit card number that identifies the card issuer, the card network, and the bank customer and accounts to which it’s connected.

You read that right. While each credit card you own is linked to one specific credit account, your debit card may be linked to multiple accounts (checking, savings, etc.) if they’re at one financial institution.

How does the bank decide which account you want to use for each transaction? If you use your debit card to make a purchase, the money will be pulled from the account you’ve designated as your primary checking account. And if you’re using your debit card at an ATM, you should be able to see a list of all the accounts connected to that particular card, and you can make a deposit to or withdrawal from the account of your choice.

Your debit card will not be linked to your credit card account, however, even if it’s through the same financial institution. And even if your debit card has a payment network logo or hologram in the corner, you cannot use it as a credit card. The money will be withdrawn from your bank account, either right away or after a short delay.

Credit Cards vs Debit Cards

It can be useful to have both a credit card and a debit card on hand to help manage your finances. Though they look a lot alike, there are key differences:

Recommended: Can You Use a Credit Card Like a Debit Card?

The Takeaway

Unlike checks, credit cards do not have routing numbers. Rather, a credit card number contains information about the financial institution that will settle the payment when the card is used, and it identifies the card holder who will ultimately be responsible for those charges. Understanding how these numbers work can help make managing your finances easier.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

What is a routing number?

A routing number is a nine-digit number that identifies your bank or credit union in a financial transaction.

Does a credit card have a routing number?

Credit cards don’t have routing numbers. Instead, credit cards have a 16-digit credit card number that identifies the card issuer, the payment network, and the card holder.

Where can I find my routing number?

The easiest way to find your bank’s routing number is to look at your paper checks or a bank statement. The first nine digits in the lower left corner are the routing number. You also can log onto your account online or call your bank’s customer service number to get the correct routing number.

Photo credit: iStock/RgStudio

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Being a joint account holder and an authorized user are two different ways that two people can share the same account. However, there are a few important differences that you’ll want to be aware of.

When you add an authorized user to your account, the authorized user can benefit from the good credit and payment history on your account but is not responsible for the debt. With a joint credit card account, however, both people apply at the same time and are then legally responsible for all purchases and debt on the account, regardless of which person actually makes the purchase.

What Is a Credit Card Authorized User?

An authorized user on a credit card, sometimes called a user of a supplementary credit card, is an additional person who is added to the account of the primary cardholder. The authorized user gets their own physical card and can make purchases. The authorized user may benefit from the good credit or a positive payment history on the account; it could help them establish or build their credit. However, they are not responsible for any of the purchases or debt.

How an Authorized User Impacts Your Credit

There are many factors that affect credit scores, but adding an authorized user to your account is not one of them. If you add an authorized user to your account, your credit will not be checked, and there should be no immediate impact on your credit. You will want to keep in mind, however, that you are responsible for any purchases made by authorized users. So if your authorized user spends more than you anticipate and you have trouble making the full monthly payment, it could negatively impact your credit score.

Recommended: Understanding Purchase Interest Charges on Credit Cards

Things to Consider When Adding an Authorized User to Your Account

There are many different types of credit cards out there. Here’s a quick look at some things to consider when adding an authorized user to your account, regardless of the card’s specific features:

Recommended: How Many Credit Cards Should I Have?

What Is a Joint Credit Card Account Holder?

Unlike adding an authorized user to your account, you will typically obtain a joint credit card by applying for one with another person. With a joint credit card, the credit of both prospective cardholders is evaluated and used to determine eligibility. If approved, both cardholders are equally and separately liable for all of the debts and purchases on the account, regardless of who actually made the purchase.

It’s worth noting that joint credit cards are becoming less common, and it may therefore be challenging to find one.

How a Joint Account Impacts Your Credit

When you apply for a joint account, the credit of both people is reviewed, and then the applicants are possibly approved to receive a card. This will generally show up on each potential account holder’s credit report as a new inquiry, which may temporarily lower each person’s credit score by a few points.

Additionally, both joint cardholders are responsible for all of the debt, regardless of who actually uses the credit card. So if one person spends more than expected or has trouble paying the bill on time, it may negatively impact both cardholders’ credit scores.

Things to Consider Before Opening a Joint Credit Card Account

Here’s a quick look at some things to keep in mind before opening a joint credit card account:

Joint Credit Card Account Holder vs Authorized User

Consider the differences between these two arrangements:

•   A joint credit card account is one where two people jointly open and use the account, with both people equally responsible for all of the debt.

•   An authorized user vs. a joint credit card has a key difference: The authorized user is not liable for any purchases they might make — instead the primary cardholder is responsible for all charges.

•   Being an authorized user may be one way to help establish or build your credit if the primary cardholder already has good credit and continues to use the account responsibly.

Recommended: What Is the Minimum Age to Be an Authorized User on a Credit Card?

Choosing the Right Option

A joint credit card account typically only makes sense for two people that are in a committed relationship in which they are already sharing their finances. And you will also want to keep in mind that many major credit card issuers do not offer joint credit card accounts.

An authorized user, on the other hand, can make sense if you want to help build the credit of someone who is starting out or wants to positively impact their score. By adding them to your account, you may help them establish or build their credit.

The Takeaway

An authorized user and a joint credit card account are different ways that two people can share a credit card account. With a joint credit card account, both people open the account together and are equally liable for all charges on the account. With an authorized user on an account, only the primary cardholder is responsible for the charges. Those differences may help you decide which (if either) arrangement is right for you.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Is a joint credit card holder the same as an authorized user?

No, having a joint credit card account is not the same as having an authorized user on your account. With a joint credit card, both account holders are equally and separately liable for all charges on the account, regardless of who actually makes the purchase. With an authorized user account, only the primary cardholder is responsible.

Is it better to be an authorized user or have your own credit card?

When you are an authorized user on a credit card, you can make purchases and may be able to establish or build your credit, but you’re not responsible for any of the charges. However, it may make sense at some point to work towards having your own credit card account where you don’t have to rely on anyone else.

Can you have 2 names on a credit card?

Generally there won’t be two names on a credit card, even if it is a joint account. In both the case of a joint account and being an authorized user, each person will get their own credit card with their name on it. Depending on the card issuer, the credit card account number may be the same or may be different.

Photo credit: iStock/Igor Alecsander
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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There are many ways you can keep your credit card clean without worrying about damaging the plastic, chip, or magnetic strip. Even better, most cleaning methods take less than 30 seconds.

During the course of a day, your card can pass through many hands and see plenty of action in credit card readers and ATMs. These exchanges increase the odds of your card picking up dirt, debris, and germs. With that in mind, take a look at some different ways you can practice good credit card hygiene.

Why Clean Your Credit Card?

It’s common knowledge that most paper money and coins carry germs, but credit and debit cards aren’t any cleaner. In fact, microbes, bacteria, and viruses typically stay active longer on hard surfaces like plastic and metal, sometimes for days or even weeks.

If you touch your bacteria- or virus-laden credit card and then touch your mouth, eyes, or nose, you could be introducing unwanted germs into your body. Washing your hands after handling your card can prevent the spread of germs. So can washing your credit card.

Besides wiping away bacteria, microbes, and viruses, scrubbing your card can also remove dust, dirt particles, and grime. These elements can make your card’s surface feel greasy, gritty, and sticky, and they can accumulate on or around any raised credit card numbers or letters or the edges.

Recommended: Cash vs Credit Card: Key Differences to Know

How to Clean Credit Cards

There is no one way to clean your credit cards. The method you use depends on personal choice and the cleaning materials you have on hand. If you’re worried about getting your card wet, rest assured plastic and metal credit cards are meant to be waterproof.

Whatever your cleaning method, there are a couple rules of thumb to keep in mind. The first is to be gentle. Too much elbow grease or force may cause the card to wear down prematurely and could wipe away the ink. The second rule is to dry the card completely before you put it back in your wallet or use it.

Here are some effective ways to clean your credit cards:

Soap and Water

You can wash your credit card as you would your hands — with good old soap and water. Simply suds up your card with hand or dish soap and warm water, and gently clean for 20 seconds before rinsing it off completely. Wipe dry with a paper towel, soft rag, or lint-free microfiber cloth.

Rubbing and Isopropyl Alcohol

Both types of alcohol can be used to clean your cards. Simply wet a cotton ball, tissue, paper towel, or soft cloth with the alcohol and wipe the card. To remove stubborn gunk trapped around the raised letters or digits of your card, try using a cotton swab dipped in alcohol.

Antibacterial or Sanitizing Wipes

The same wipes you use to clean surfaces at home can also be used on different types of credit cards. These products work to rid your card of any bacteria and viruses hanging out on your credit or debit card.

Multi-Surface Household Cleaner

An all-purpose cleaner will also do the trick of cleaning your card. It’s better to spray the solution onto a cotton ball, paper towel, or clean rag instead of directly onto your card. Vinegar, which also works as a household cleaner, is another option.

One caveat: If you have a credit card made of metal or a metal composite, you may need to follow a different cleaning regimen. Apple, for example, warns against applying certain products or methods when cleaning the titanium Apple Card. On the list are household or window cleaners, compressed air, ammonia, and abrasive cleaners. If you have a metal card and aren’t sure what material it’s made of, check with your credit card issuer before cleaning it.

UV Light Sanitizer

These devices use ultraviolet light to kill any viruses and bacteria found on nonporous surfaces. Often used to kill germs on cell phones, many of these machines sanitize credit cards as well.

How to Clean the Chip and Magnetic Strip on a Credit Card

There may be times when you insert a credit card into a chip reader or swipe it at the card reader machine, but can’t complete the transaction. This could be because your credit card’s chip or magnetic strip needs to be cleaned.

You might think getting the chip or strip wet would damage the card, but in reality, the chip reader and magnetic strip can be cleaned with the methods mentioned above. However, you don’t want to soak your card in any liquid — even soapy water — or scrub the chip or strip too hard. Doing so can damage it over time.

There are also ways to de-gunk a chip or strip that don’t involve cleaning products. For instance, after gently wiping off your card, you can use a rubber eraser to lift any remaining strip residue. Another option is to place a piece of clear tape over a dirty strip or chip and then peel it off; the grime should stick to the tape.

5 Things to Avoid Doing When Cleaning a Credit Card

Not all cleaning methods are created equal. In fact, some could damage your card. Here are five to avoid.

1. Scrubbing with a rough sponge

You don’t need to apply too much pressure or scour your card with an abrasive sponge. Both could damage the card, especially the chip and magnetic strip.

2. Your washing machine

You might think throwing your card into the wash with your clothes is harmless. But the harsh chemicals found in most laundry detergents could do more harm than good. For one thing, they can cause the card’s protective coating to peel off.

3. Hand sanitizer

While hand sanitizer can work in a pinch, it isn’t the best product to use when cleaning off your card. The moisturizing ingredients in the gel or liquid can leave behind a residue.

4. Soaking in rubbing alcohol

While you can wipe down your card with rubbing alcohol, experts warn against submerging your card in it because it can be corrosive.

5. Using heat

Heat and hot water can kill off germs, but using very high temperatures to clean or sterilize your credit card can actually damage it. Using a blow dryer, a clothes dryer, or boiling water to blast off any germs can cause the card’s plastic to soften or warp.

Cleaning vs Disinfecting a Credit Card

Both cleaning and disinfecting your credit card are effective, but they aren’t synonymous, and one step should precede the other.

According to the Centers for Disease Control and Prevention, you should clean first and then disinfect. Why? Washing a surface before you do anything else removes impurities like dirt, whose presence may make it harder for the chemicals in sanitizers and disinfectants to reach and kill germs.

How Often Should Credit Cards Be Cleaned?

How often you should clean your card largely depends on how often you use it. Ideally, you should clean your credit cards after every use, though that can be difficult if you’re out and about and using your card at different places. Generally, aim to clean your card once a day if you use it regularly, or once a week if you don’t.

Recommended: 7 Tips to Help You Use Your Credit Cards Wisely

Other Credit Card Maintenance Tips

Your wallet can get pretty dirty, making it harder to keep your credit card clean. Try storing it in a plastic photo holder or a card protector sleeve. Your credit card company may have issued your card in one, or you can make your own by wrapping a credit card-sized piece of paper around the card and taping the ends together. Another option is to purchase a separate credit card holder.

You may also want to use contactless credit card payments, which allow you to avoid swiping or inserting your card into a reader. One way to do that is with a contactless credit card. These cards feature an icon that resembles the wifi symbol and let you “tap and pay” at a payment machine.

You may also decide to store your credit card in a mobile wallet, which is a virtual wallet that lives on your cell phone, smartwatch, or other mobile device.

Recommended: Understanding Purchase Interest on Credit Card Charges

The Takeaway

Any time your credit card changes hands or is inserted into card readers and ATMs, it can pick up dirt and germs that can live on the surface for days or even weeks. Cleaning your credit cards regularly can help protect you. Using soap and water, rubbing alcohol, antibacterial wipes, or multi-surface household cleaners may all help you keep your card in tip top shape. Using a contactless credit card or mobile wallet are other ways to cut down on your card’s exposure to germs.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Can credit cards survive being washed?

They can, as long as you use gentle methods and surface-friendly products. Things to avoid: using an abrasive sponge and scrubbing too hard; submerging your card in potentially corrosive liquids like rubbing alcohol; and running the card through the washing machine.

Why do people clean their credit cards?

Credit cards can accumulate dirt and germs whenever they change hands or are inserted into a card reader or ATM. Cleaning your credit cards gets rid of bacteria and viruses that can stay on your cards for a period of time. But it can also remove stubborn grime that can scrape or otherwise damage your chip or magnetic strip.

Can you clean a magnetic strip on a credit card?

Although magnetic strips are less popular than in the past, they are still in use, and you can clean a magnetic strip with soap and water, an antibacterial wipe, rubbing alcohol, a safe household cleaner, or a UV light sanitizer. You can even use a pencil eraser or a piece of clear tape to remove dirt from a magnetic strip.

Photo credit: iStock/Khosrork

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

SOCC-Q225-009

Whether to use store credit cards vs. major credit cards can be a very personal decision. Store cards have limited reach and may have higher interest rates, but they can give additional perks specific to their store. Standard credit cards may not offer those rewards, but their near universal acceptance and their own benefits could work better for your needs.

Here’s a closer look at how store cards compare to major credit cards, what their pros and cons are, and how store cards can impact credit.

What Is a Store Card?

A store credit card or retail credit card is a card issued by a store or retailer. There are two main types of store cards — open-loop and closed-loop store credit cards.

•  An open-loop store credit card is likely a Visa or Mastercard that simply is co-branded with the retailer’s name and logo, but good to use anywhere those networks are accepted.

•  A closed-loop store card, also called a private label credit card, can only be used at the retailer that issues the card.

How Store Cards Works

Open-loop store credit cards are typically Mastercard or Visa credit cards, and they can be used anywhere those payment networks are accepted. While it may be marketed or branded with the retailer’s logo and name, an open-loop store card functions in the same way any other credit card works.

On the other hand, a closed-loop store card is only accepted at the store that issued the card. If you try to use a closed-loop store credit card at any other place, it will be declined.

With either kind of card, you’ll get a statement each month with the charges you’ve made. You’ll be charged credit card interest on any outstanding balance, just like with a general-purpose credit card.

Recommended: Charge Card vs. Credit Card

Pros and Cons of Store Cards

One pro of store credit cards is that they often give perks and rewards that are specific to that particular store. If you frequently shop at a particular retailer, it can be lucrative to get their store credit card. You may also be able to get a signup bonus for applying and being approved for the card. Or you might earn rewards that can translate into a discount on a purchase.

On the other hand, a store credit card can be limiting, especially if it is a closed-loop credit card that you can’t use anywhere else. Many store credit cards also come with higher-than-average interest rates, so it can be wise to pay off your balance in full each month so you can avoid paying any extra.

Store Card vs Credit Card Compared

While there are some important differences between store cards and general-purpose credit cards, they also share some similarities.

Similarities

•  You get a monthly statement with a list of all of your purchases.

•  You’ll be charged interest on any outstanding balance.

•  Payment history and balance information typically reported to the major credit bureaus.

•  Open-loop store credit cards and general-purpose credit cards can both be used anywhere the payment network (Visa, Mastercard) is accepted.

Differences

There are also some key differences between store cards and credit cards that you’ll want to be aware of:

•  A closed-loop store card can only be used by the issuing retailer.

•  You may pay a higher interest rate for a store card.

•  The rewards you get will likely only be usable at the retailer.

Here is how these features stack up in chart form:

Recommended: How Many Credit Cards Should You Have?

Is It Easier to Get Store Cards?

How easy it will be to get any kind of credit card depends on the specific card and your own financial situation. However, it is generally believed that on average it is easier to get a store credit card than it is to get many other major credit cards.

In fact, at some stores, you may even be able to get approved in the middle of your transaction as you check out.

Can Store Cards Impact Credit?

Yes, store cards can impact your credit, either positively or negatively, depending on how you use them. That’s true of all credit cards and is part of how they work.

Just like any credit card, your store card information is also reported to the major credit bureaus (Equifax®, Experian®, and TransUnion®). That means that if you use your store card responsibly, you can help build your credit, while if you fall behind on payments and/or carry a balance, it might have a negative impact on your credit.

Which Is Right for You: Store Card or Credit Card?

Deciding whether a store card or regular credit card is right for you will depend on your own specific shopping habits and overall financial situation. If you frequently shop at a particular store or retailer, you may be able to take advantage of rewards, discounts, or other benefits that come with the store’s credit card.

However, general-purpose credit cards may offer better or more flexible rewards, in addition to having more flexibility in where you can use them.

The Takeaway

Store credit cards come in two different varieties — open-loop and closed-loop cards. An open-loop store card is one that may be branded or marketed as a store credit card, but can be used anywhere the card’s payment network (e.g. Visa or Mastercard) is accepted. A closed-loop store card can only be used at the store or retailer that issues it. While there can be good reasons to get a store credit card, you might be better off with a more flexible credit card that gives cash back or other flexible rewards and may charge a somewhat lower interest rate.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

Which is better: a credit card or store card?

There isn’t a single right answer as to whether a credit card or a store card is better. Instead, it will depend on your own specific situation. If you are a frequent shopper at a particular store or retailer, it may make sense to open its store credit card and get those rewards. However, if you’re not especially loyal to certain stores, you might prefer to get a general-purpose credit card and earn rewards that way.

Does a store card count as a credit card?

A store credit card can be considered a credit card since you can carry a balance and get charged interest. But keep in mind that only open-loop store credit cards can be used more widely like other major credit cards.

What are the disadvantages of a store card?

While it can make sense to apply for a store card, depending on your financial situation and shopping habits, store cards may come with some disadvantages. Many store credit cards have interest rates that are higher than average, so it can be best to pay off your balance in full each month to avoid those steep charges. Additionally, closed-loop store cards can only be used at the retailer that issues them, which makes them less flexible.

Photo credit: iStock/RgStudio

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

This content is provided for informational and educational purposes only and should not be construed as financial advice.


Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Third Party Trademarks: Certified Financial Planner Board of Standards Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER®, CFP® (with plaque design), and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.

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If you don’t pay your credit card bill, you could face more severe consequences than you might think. Though it will depend on your credit card issuer, you can generally expect to be charged a late fee as well as a penalty interest rate which is higher than the regular purchase annual percentage rate, or APR.

Life happens, and, from time to time, payments are missed, especially if you’re dealing with emergencies such as losing a job or a family crisis. In the event you have skipped a credit card payment, it’s crucial you understand what consequences you may face. That way, you can take steps to reduce the odds of it having a major impact on your financial health.

What Happens If You Don’t Pay Your Credit Card?

Consequences for missed credit card payments could include being changed late fees and possibly losing your grace period. It may also negatively affect your credit score since issuers report your payment activity to the credit bureaus — in most cases after 30 days.

There may be other consequences depending on how late your payment is and whether it’s your first time missing a payment.

Accruing Interest

When you don’t pay your credit card, interest will accrue and will continue to do so as long as you have a balance on your card. In essence, you are paying more for your initial purchase thanks to that interest.

The longer you go without paying your credit card, the more you risk your rate going up. Your credit card issuer may start imposing a penalty annual percentage rate (APR), which tends to be higher than your regular purchase APR. If this happens, you’ll end up paying more in interest charges. The penalty APR may apply to all subsequent transactions until a certain period of time, such as for six billing cycles.

Collections

Depending on your credit card issuer, your missed payments may go into collections if it goes unpaid for a period of time. You’ll still continue to receive notices about missed payments until this point.

More specifically, if you don’t pay your credit card after 120 to 180 days, the issuer may charge off your account. This means that your credit card issuer wrote off your account as a loss, and the debt is transferred over to a collection agency or a debt buyer who will try to collect the debt.

Once this happens, you now owe the third-party debt buyer or collections agency. Your credit card issuer will also report your account status to the major credit bureaus — Experian®, TransUnion®, and Equifax®. This negative information could stay on your credit report for up to seven years.

It’s hard to tell what third-party debt collectors will do to try and collect your debt. Yes, they may send letters, call, and otherwise attempt to obtain the money due.

Some collections agencies may even try to file a lawsuit after the statute of limitations expires. In rare cases, a court may award a judgment against you. This means the collections agency may have the right to garnish your wages or even place a lien against your house.

If your credit card bill ends up going to collections, take the time to understand what your rights are and seek help resolving the situation. Low- or no-cost debt counseling is available through organizations like the National Foundation for Credit Counseling (NFCC).

Bankruptcy

You may find that you have to declare bankruptcy if you still aren’t able to pay your high credit card debt and other financial obligations. This kind of major decision shouldn’t be taken lightly. You will most likely need to see legal counsel to determine whether you’re eligible.

If you do file for bankruptcy, an automatic stay can come into effect, which protects you from collection agencies trying to get what you owe them. If you successfully declare bankruptcy, then your credit card debt will most likely be discharged, though there may be exceptions. Seek legal counsel to see what your rights and financial obligations are once you’ve filed for bankruptcy.

Recommended: Understanding Purchase Interest Charges on Credit Cards

Making Minimum Payments

A minimum payment is typically found in your credit card statement and outlines the smallest payment you need to make by the due date. Making the minimum payment ensures you are making on-time payments even if you don’t pay off your credit card balance. Any balance you do carry over to the next billing cycle will be charged interest. You can also avoid late fees and any other related charges by making a minimum payment vs. not paying at all.

Recommended: Breaking Down the Different Types of Credit Cards

What Happens if You Miss a Payment

If you can’t pay your credit card for whatever reason, it’s best to contact your issuer right away to minimize the impact. Let them know why you can’t make your payment, such as if you experienced a job loss or simply forgot. For the latter, pay at least the minimum amount owed as soon as you can (ideally before the penalty or higher APR kicks in).

If this is your first time missing a payment but you have otherwise paid on time, you can try talking to the credit card company to see if they can waive the late fee.

Some credit card issuers may offer financial hardship programs to those who qualify, such as waiving interest rates, extending the due date, or putting a pause on payments (though interest may still accrue) until you’re back on your feet.

15/3 Rule for Paying Off Credit Cards

The 15/3 payment method can help you keep on top of payments and lower your credit utilization — the percentage of the credit limit you’re using on revolving credit accounts — which can impact your score.

Instead of making one payment when you receive our monthly statement, you pay twice — once 15 days before the payment due date, and the other three days beforehand. This plan is useful if you want to help build your credit history and pay on time.

The Takeaway

Missing your credit card payment may not be a massive deal if it just happens once or twice, but it can turn into one if you continue to ignore your bill. Late fees, a higher penalty APR or, worse still, having your account go to collections could result. That’s why if you are having trouble paying your bill (or simply forget to), you should contact your credit card issuer ASAP.

Whether you're looking to build credit, apply for a new credit card, or save money with the cards you have, it's important to understand the options that are best for you. Learn more about credit cards by exploring this credit card guide.

FAQ

How long can a credit card go unpaid?

The statute of limitations, or how long a creditor can try to collect the debt owed, varies from state to state, which can be decades or more.

What happens if you never pay your credit card bill?

If you never pay your credit card bill, the unpaid portion will eventually go into collections. You could also be sued for the debt. If the judge sides with the creditor, they can collect the debt by garnishing your wages or putting a lien on your property.

Is it true that after 7 years your credit is clear?

After seven years, most negative remarks on your credit report, such as accounts going to collections, are generally removed.

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