If you're planning to travel abroad and have outstanding credit card debt, it's essential to understand the implications of not paying your credit card bills before leaving. Credit card companies have different policies regarding payments made outside the country, and failure to comply with these can result in penalties, damage to your credit score, and even legal action. In this article, we will delve into what happens if you don't pay your credit card and leave the country, including potential consequences and strategies to avoid them.
Firstly, let's clarify that credit card companies typically do not report delinquencies to international credit reporting agencies like TransUnion or Equifax. However, they may still pursue collection efforts through their local branches or agents in the country you are visiting. This means that while your credit score might not be affected immediately, the debt could still accrue interest and fees while you are away.
When you fail to make a payment on time, your credit card company may charge you late fees. These fees vary by issuer but can range from $25 to $39 per missed payment. Additionally, if you continue to miss payments, your account may be subject to a higher annual percentage rate (APR), which can significantly increase the cost of the outstanding balance.
If you decide to travel without paying your credit card bills, there are several steps you should take to minimize the risk of negative consequences:
1. Contact Your Credit Card Company: Before leaving, contact your credit card company and inform them of your travel plans. Ask about their policy regarding payments made outside the country and whether they recommend making a payment via phone or online. Some companies may offer assistance in arranging payment arrangements or waiving fees for a limited period.
2. Set Up Autopay: If possible, set up an automatic payment plan with your credit card company. This ensures that you maintain a consistent payment schedule and reduces the risk of missing a payment due to forgetfulness or unavailability of funds.
3. Consider Closing the Account: If you have a significant amount of debt and are unable to make payments while traveling, consider closing the account. However, closing a credit card account can negatively impact your credit score, so it should only be considered as a last resort.
4. Notify Your Bank: Inform your bank about your travel plans and ensure that they do not freeze your account due to suspicious activity. Some banks may require additional security measures such as temporary card blocking or increased transaction limits during international travel.
5. Be Prepared for Collection Actions: While your credit card company may not report delinquencies to international agencies, they may still attempt to collect the debt through other channels. Keep a record of all communication with your credit card company and be prepared to provide documentation of your attempts to resolve the issue.
In conclusion, failing to pay your credit card bills before leaving the country can lead to various consequences, including late fees, increased APR, and potential legal action. To minimize these risks, it is crucial to communicate with your credit card company and take proactive steps to manage your debt. By being transparent and responsible with your financial obligations, you can avoid unnecessary stress and complications during your travels.