Credit card debt results when a client of a credit card company purchases an item or service through the card system. Debt grows through the accrual of interest and penalties when the consumer fails to repay the company for the money they have spent.
The results of not paying this debt on time are that the company will charge a late payment penalty and report the late payment to credit rating agencies. Being late on a payment is sometimes referred to as being in " default ". The late payment penalty itself increases the amount of the consumer's total debt.
Additionally, a customer may see their interest rate drastically increased as a result of missing multiple payments. [1] The penalty APR rate varies from card to card and is usually disclosed in literature at the time of a credit card application and also as paper inserts in the envelope that contains a credit card directly shipped to a customer's residence.