What Happens If My Card Payment Is Returned?

Sometimes, life happens, and you suddenly find it difficult to stay on top of your financial situation. You’re not alone if you’ve made a credit card payment, thinking it would go through, and suddenly discover that it has been returned.

If you’re wondering why this happens and what it means for your credit score, this guide can help answer those questions. Learn why your credit card payment may have been returned and what happens next.

Why was my credit card payment returned?

Your credit card payment may have been returned if you did not have sufficient funds in your bank account. Make sure to check your account to determine if this was the cause of the return.

The payment may also have been returned if you recently switched banks and forgot to update your bank account information or entered it incorrectly.

What happens when you get a returned credit card payment?

A returned payment triggers immediate consequences, but it’s not just one penalty you may face. The two most common outcomes include:

1. You may be charged a returned payment fee

Banks have their own policies about how to deal with situations where the credit card payment you send them does not clear your financial institution. Typically, they will charge you a fee for a returned payment. The card issuer may also make more than one attempt to collect the money from your financial institution. If the payment goes through at some point, the issuer may still collect the returned payment fee.

The amount of the returned payment fee often varies between $25 and $40, according to Experian. It should be lower if you’ve had no other recent returned payment offense on your record, but if you have been guilty of the same offense recently, the fee could be higher. In any event, the fee should not be higher than your minimum payment due.

Card issuers could also charge you a late fee if your card payment is returned, depending on the terms of your agreement with them.

2. Your bank may charge you for non-sufficient funds

Not only will your card issuer charge you if your card payment is returned, but your financial institution will also typically penalize you with a “non-sufficient funds” or overdraft fee that could be as high as $37, according to the Consumer Financial Protection Bureau (CFPB).

However, the CFPB reports one positive development, which is that a number of large financial institutions have decided to do away with non-sufficient fund fees on their checking accounts. This will result in annual consumer savings of about $2 billion.

This positive development involves several large banks that have recently decided to eliminate non-sufficient funds fees on checking accounts. Bankrate reports that these include:

• Alliant Credit Union
• Ally Bank
• Bank of America
• BECU (Boeing Employees Credit Union)
• BMO Harris
• Capital One
• Chime
• Citibank
• Citizens Bank
• Discover Bank
• Fifth Third Bank
• Huntington Bank
• KeyBank
• PNC Bank
• Regions Bank
• Santander Bank
• Truist Bank
• U.S. Bank
• Wells Fargo

How a returned payment can impact your credit

Your payment history is a big part of your credit score (accounting for 35 percent of the score), and making payments on time helps build up your score. If your card payment does not go through and you are past the payment due date, it will be seen as a late payment or even a missed payment. This tends to lower your score, as a missed payment can remain on your credit report for up to seven years.

The good news is that, typically, your payment would have to be more than 30 days past the due date for the card issuer to report this lapse to the credit reporting agencies. If you have an otherwise good record with your account, you should talk to your issuer’s customer representative and ask for grace for this one-time lapse.

The bottom line

If your credit card payment is not processed, your card issuer will typically charge you a returned payment fee. They could even add on a late payment fee, depending on the terms of your card agreement. Not only that, but your bank may also assess you for a “non-sufficient funds” fee.

A late or missed payment could eventually show up on your credit report and bring down your credit score, possibly staying on your credit report for up to seven years. The best way to guard against a returned payment is to keep track of the funds in your account and budget your spending.