What Happens If You Miss a Credit Card Payment in Canada?

Missing a credit card payment by a few days rarely ruins your credit, but it does cost money, and a second miss can cost much more. Here's what happens, in order.

Right away: interest and fees

• You lose the interest-free grace period. In Canada, federally regulated issuers must give at least 21 days without interest on new purchases, but only if you pay the full balance by the due date. Miss it, and interest is charged on your purchases from the date you made them.
• Some cards charge a late fee. Each card's teardown lists its fees.
• Promotional rates can end. A low intro rate on a balance transfer may be cancelled after a missed payment.

After two missed payments: a penalty interest rate

Many Canadian cards raise your interest rate if you miss two minimum payments within 12 months. The higher rate typically lasts until you've made a set number of on-time payments in a row, often 12. On a card where you carry a balance, that can add hundreds of dollars a year.

Teardowns such as the Scotia Momentum Visa Infinite and the CIBC Classic Visa show the exact penalty rates and how to get back to the regular rate.

Rewards and welcome bonuses can be lost

Most reward programs require the account to be in good standing:

• a welcome bonus still being earned can be cancelled
• some cards stop earning, or block redemptions, while the account is past due
• if the issuer closes an account in arrears, unredeemed points or cash back can be forfeited

Your credit report

A payment that is a few days late usually isn't reported to the credit bureaus. Once it's 30 days or more past due, the issuer can report it to Equifax and TransUnion, and the late payment can stay on your credit report for up to six years. That's the part that affects future loans and mortgages.

If the account falls further behind

Some cardholder agreements let the bank take an overdue balance from your deposit accounts at the same bank. Eventually the account can be closed and sent to collections.

What to do if you've missed a payment

1. Pay at least the minimum as soon as possible, ideally before 30 days pass.
2. Call the issuer. For a first miss, many will waive a fee or interest charge if you ask.
3. Set up an automatic minimum payment so it can't happen again, and pay the rest manually.
4. Check your credit report a month or two later to confirm how it was reported.

Wondering how a new application affects your score as well? Read does applying for a credit card hurt your credit score.