Understanding the Impact of Credit Card Overdue on Your Credit Score in 2024

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In today’s fast-paced world, credit cards have become indispensable for many Indians. They offer convenience, rewards, and the ability to manage cash flow effectively. However, the benefits come with the responsibility of timely payments. Falling behind on credit card payments can have significant consequences, especially on your credit score. This blog delves into the problems faced due to credit card overdue and how it affects your credit score, specifically from the Indian context.

What is Credit Card Overdue?

Credit card overdue refers to the outstanding balance that remains unpaid past the due date. When you use a credit card, the issuer sends you a statement at the end of each billing cycle, detailing your transactions and the amount due. If you fail to pay at least the minimum amount by the due date, your account becomes overdue. Overdue payments can start a cycle of debt that’s difficult to escape and can lead to several financial issues.

Common Reasons for Credit Card Overdue

1. Financial Mismanagement

Many people find themselves in credit card debt due to poor budgeting and financial planning. It’s easy to swipe a credit card without considering the future implications, especially when spending on non-essential items. Without a clear budget, it’s hard to track expenses and manage repayments effectively. Overspending on dining out, shopping, and leisure activities can quickly add up, leaving you with an unmanageable balance at the end of the month.

2. Unexpected Expenses

Life is unpredictable. Sudden medical emergencies, urgent car repairs, or other unforeseen expenses can disrupt even the most well-planned budgets. In such scenarios, people often resort to using their credit cards, which can lead to overdue payments if they are unable to pay off the balance quickly. For instance, an unexpected hospital visit or a necessary home repair can throw your finances off balance.

3. Job Loss or Income Reduction

The loss of a job or a significant reduction in income can make it challenging to keep up with credit card payments. With the rising cost of living in India, a sudden drop in income can lead to financial distress, making it difficult to meet monthly obligations. This is particularly stressful as fixed expenses like rent, utilities, and groceries must be prioritized, leaving less for credit card payments.

4. High-Interest Rates

Credit cards in India often come with high-interest rates. If the balance is not paid in full, the interest can accumulate quickly, leading to a much larger amount owed. This compounding effect can make it harder to pay off the debt, causing overdue payments. High-interest rates, sometimes upwards of 40% annually, can make it seem like your debt is growing faster than you can pay it off.

Problems Faced Due to Credit Card Overdue

1. Late Payment Fees

One of the immediate consequences of not paying your credit card bill on time is incurring late payment fees. These fees can add up quickly, increasing your overall debt. For instance, most Indian banks charge a late payment fee ranging from Rs. 300 to Rs. 1,200 depending on the outstanding balance. This additional cost can strain your budget further, making it even more challenging to catch up on payments.

2. Increased Interest Rates

Credit card issuers may increase your interest rate if you consistently miss payments. This means you’ll pay more in interest each month, making it even harder to pay off your balance. This is often referred to as a penalty APR, and it can significantly increase the cost of your debt. Higher interest rates result in higher monthly payments, which can quickly become unaffordable.

3. Reduced Credit Limit

Your credit card issuer might reduce your credit limit if you have overdue balances, affecting your purchasing power and credit utilization ratio. A lower credit limit can also impact your credit score negatively because it increases your credit utilization ratio. A reduced limit restricts your ability to use your card for necessary expenses and can signal to other lenders that you are a higher risk borrower.

4. Collection Calls

Frequent overdue payments can result in collection calls and harassment from debt recovery agents, adding to your stress. In India, debt collectors can be persistent, and receiving multiple calls a day can be distressing. This constant pressure can affect your mental health and lead to increased anxiety and stress.

5. Legal Action

In severe cases, the credit card company may take legal action to recover the overdue amount, leading to further financial and legal complications. This can include court cases and legal fees, adding to your financial burden. Legal action can also result in wage garnishment or asset seizure, further complicating your financial situation.

How Credit Card Overdue Affects Your Credit Score

Your credit score is a three-digit number that represents your creditworthiness. In India, credit scores are provided by credit bureaus like CIBIL, Experian, Equifax, and CRIF High Mark. Here’s how overdue credit card payments can impact your credit score:

1. Payment History (35% of your score)

Payment history is the most significant factor in calculating your credit score. Missing payments or paying late can severely damage your score. Each overdue payment is reported to the credit bureaus and stays on your credit report for up to seven years, reflecting poorly on your creditworthiness. A single missed payment can lower your score significantly, and multiple missed payments can have a cumulative negative effect.

2. Credit Utilization Ratio (30% of your score)

This ratio compares your current credit card balance to your credit limit. High credit utilization indicates higher risk and can lower your credit score. Overdue balances contribute to high utilization, negatively impacting your score. Ideally, you should keep your credit utilization below 30%. For example, if you have a credit limit of Rs. 1,00,000, you should aim to keep your balance below Rs. 30,000.

3. Length of Credit History (15% of your score)

The length of time you’ve used credit also affects your score. Frequent overdue payments can lead to account closures, shortening your credit history and lowering your score. A long, well-managed credit history shows lenders that you are a reliable borrower. Closing older accounts or having them closed due to non-payment can shorten your credit history and negatively impact your score.

4. Credit Mix (10% of your score)

Having a variety of credit accounts (credit cards, loans, etc.) can positively impact your score. However, overdue credit card payments can lead to account closures or restrictions, affecting your credit mix. A varied credit portfolio shows that you are able to appropriately handle various credit kinds. Losing access to a credit card can reduce the variety in your credit mix, potentially lowering your score.

5. New Credit (10% of your score)

Applying for new credit frequently can lower your score. If you’re overdue on your credit card, you might apply for new credit to manage your debt, further impacting your score. Each new application results in a hard inquiry, which can temporarily reduce your credit score. Multiple hard inquiries in a short period can signal to lenders that you are in financial distress.

Real-Life Scenarios

To make this information more relatable, let’s explore a few real-life scenarios that illustrate the impact of credit card overdue on individuals in India.

Scenario 1: The Young Professional

Rohit, a 28-year-old IT professional, used his credit card extensively for online shopping and dining out. He often paid only the minimum amount due and gradually accumulated a significant balance. One month, an unexpected medical expense for his family caused him to miss his credit card payment. This resulted in late fees and a higher interest rate. His credit score took a hit, and he struggled to get approved for a personal loan when he needed it most. Rohit’s situation highlights how a single missed payment can lead to a series of financial challenges, affecting both his short-term and long-term financial goals.

Scenario 2: The Small Business Owner

Priya, a small business owner, relied on her credit card to manage cash flow for her business. During a slow season, her business revenue dropped, and she couldn’t pay her credit card bill in full. The overdue balance led to collection calls and stress. Her reduced credit score made it difficult to secure a business loan to keep her operations running. Priya’s case shows how credit card debt can impact not only personal finances but also business operations, leading to a stressful and precarious situation.

Scenario 3: The Retiree

Mr. Sharma, a retired government employee, used his credit card for travel and emergencies. After a major health issue, his medical expenses piled up, and he couldn’t pay his credit card bill on time. His overdue balance resulted in a reduced credit limit and a lower credit score. This affected his ability to get a loan for his granddaughter’s education. Mr. Sharma’s experience illustrates how unexpected life events can disrupt financial stability, affecting not just the individual but also their family members.

Tips to Avoid Credit Card Overdue and Improve Your Credit Score

1. Create a Budget

Track your income and expenses to ensure you can pay your credit card bill on time. Avoid unnecessary expenses and focus on paying off your debt. A detailed budget helps you prioritize essential spending and allocate funds for debt repayment. Using budgeting apps or spreadsheets can help you keep a closer eye on your finances.

2. Set Up Payment Reminders

For peace of mind, set up automated payments or reminders so you never forget a deadline. Many banks and financial apps offer features to set up alerts for upcoming payments, helping you stay on track. Consider setting multiple reminders a few days before the due date to ensure timely payments.

3. Pay More Than the Minimum

Whenever possible, pay more than the minimum amount due to reduce your outstanding balance faster. Paying only the minimum keeps you in debt longer and increases the amount of interest you pay over time. Aim to pay off the entire balance each month to avoid interest charges altogether.

4. Limit Credit Card Usage

Use your credit card wisely and avoid maxing out your limit. Keep your credit utilization ratio below 30%. Consider using cash or a debit card for smaller purchases to prevent overspending. Also, avoid using your credit card for cash advances, which come with higher interest rates and fees.

5. Emergency Fund

Maintain an emergency fund to cover unexpected expenses, so you do not have to rely on your credit card. An emergency fund acts as a financial buffer, reducing the need to accumulate credit card debt during tough times. The emergency fund should have enough money in it to cover three to six months’ worth of living expenditures.

6. Negotiate with Your Issuer

If you’re facing financial difficulties, contact your credit card issuer to discuss a payment plan or request a lower interest rate. Many issuers are willing to work with customers to create manageable repayment plans. Being proactive and communicating with your issuer can help you avoid severe consequences like legal action or account closure.

7. Monitor Your Credit Report

Examine your credit report on a regular basis for inaccuracies and disparities. Dispute any inaccuracies to ensure your credit score reflects your true creditworthiness. Annual checks can help you stay aware of your credit standing and identify areas for improvement. In India, you can get a free credit report from each credit bureau once a year.


While there are many advantages to credit cards, using one entails making on-time payments. Not making credit card payments on time can result in serious issues including late fines, higher interest rates, and a worse credit score. You may keep your credit score high and your financial situation stable by being aware of these implications and acting proactively to handle your credit responsibly.

You may profit from having a good credit score in India and avoid the hazards of credit card late by being well-informed and diligent. Recall that careful and educated decision-making is the first step towards financial independence.