What happens when your unpaid credit card debt is charged off?

MoneyWatch: Managing Your Money What happens when your unpaid credit card balance is charged off? We may receive commissions from some links to products on this page. Promotions are subject to availability and retailer terms. .chip { background-image: url('/fly/bundles/cbsnewscore/images/chip-bgd/chip-bgd-moneywatch.jpg'); } By Angelica Leicht Angelica Leicht Senior Editor, Managing Your Money Angelica Leicht is the senior editor for the Managing Your Money section for CBSNews.com, where she writes and edits articles on a range of personal finance topics. Angelica previously held editing roles at The Simple Dollar, Interest, HousingWire and other financial publications. Read Full Bio Angelica Leicht May 20, 2026 / 11:44 AM EDT / CBS News Add CBS News on Google Despite what it may sound like, a credit card charge-off does not offer you a fresh start if you've fallen behind. Phira Phonruewiangphing/Getty Images Credit card debt has become increasingly difficult for many borrowers to outrun, particularly over the last few years. While wages have risen in some sectors, so have basic living costs due to persistent, and now rising, inflation, adding strain to Americans' budgets. That, in turn, has led more people to rely on borrowing tools, like credit cards, to bridge everyday spending gaps. At the same time, average credit card rates are hovering close to 22%, making it harder for borrowers to make meaningful progress, especially once the interest charges compound.The strain from that increased financial pressure doesn't always show up overnight, though. In many cases, borrowers start by falling slightly behind while trying to prioritize essentials like housing, groceries, insurance premiums or medical bills. But as the missed credit card payments accrue, lenders often begin to escalate the collection efforts by adding late fees and increasing interest costs along the way. In turn, what may have started as a manageable balance can quickly become difficult to contain.And...