Credit Card Payments

It’s important to stay current with your financial obligations, and this includes your credit card payments. A record of late or skipped payments on a credit card can affect your credit score negatively. You may also end up paying more because of your payment record in higher interest rates and late payment fees. Read the information below to have a good understanding of how credit card payments can work to your advantage or disadvantage.

Late Credit Card Payments

When you are late with a credit card payment, one of the things that can happen is that the company will charge you a late fee. The amount of the fee will depend on the card issuer, but will likely be in the $15-$35 range. The fee is charged each month that you are late with your payment.

The credit card company can also increase the interest rate on your credit card if you don’t make your payments on time. The company can take this step along with any late fees that are charged to your account. If you receive notice that you will be charged a higher rate on your card, ask the credit card company if the rate increase is permanent. Even if you transferred a pre-existing balance to a new credit card provider to take advantage of a lower or zero interest rate, they have the right to raise that rate if you miss a single payment. Be aware that the new rate is usually very high.

You may be able to qualify for a better interest rate if you are able to make your payments on time for six or 12 months. Since each credit card issuer establishes its own policies about interest rates, check your cardholders’ agreement or contact the company directly to find out if the higher interest rate is set in stone. If the credit card company won’t budge and you can transfer the balance to a credit card with a lower interest rate, this step will make your credit card payments easier to manage.

Increase In Credit Card Rates

When a credit card company increases your interest rate because you are having trouble paying your bill on time, it only compounds the problem. A higher interest rate makes it harder to pay down your debt, whether you are already having trouble or not.

If you are late making your payment by 30 days or more, that fact will be noted on your credit report. It stays on there for seven years after the fact. This information can be seen by anyone who pulls your credit report, which can affect whether you can borrow money for other purposes and the interest rate that other lenders will charge you. Potential employers may even look at your credit rating when considering you as a job candidate.

Credit Card Payment History

One of the factors that determine your credit score is your payment history. Being late or missing payments entirely will have a negative effect on your credit score. If this number drops low enough, you may not be able to get additional credit extended to you.

To minimize the possible damage to your credit score, you should bring your account up to date as soon as you can. Being late by 30-60 days is not considered as serious as being 90 days or more behind in your payments. Once you get to that point, the credit score is affected to the same level as if you were subject to collections proceedings, especially if the late payment occurred within the past 24 months.

Missing credit card payments is not something you want on your payment record, and there are some things you can do to help manage your credit and make sure you make your payments on time. You can set up an automatic payment schedule through your bank to pay a set amount on a certain day of the month. Pay by phone or Internet banking if these services are available to you. Not only are they convenient, but you are given a confirmation number that can be used to track your payment if there is ever any question of when you made your payment.

If you like to make your credit card payments by regular mail, make a note on your calendar to remind you to put the check into the mailbox early enough for it to reach the credit card company and be credited to your account by the due date. Don’t hesitate to pay extra to send your payment by express mail if necessary.

Financial difficulties can occur from time to time, and if you are stuck and unable to make your credit card payments on time, the best approach is proactive one. Contact the customer service department of your credit card company and explain your situation to an agent. Tell them how much you can pay, and how soon you will be able to do so. The credit card company may extend your due date or waive the late fees because you took the initiative to contact them.

You can find out what your current FICO rating or credit score is online, and often for free. The three credit bureaus that track this information are Experian, Equifax, and TransUnion. You can contact each one directly, or use a service that will access all of them.

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