What happens when my credit card payment is late?

Late credit card payments have increased 59% over the last year due to the financial hardships our country is facing. Though these may be tough times for us, credit card companies are benefiting from our struggles. In light of this, you may wonder what happens when your credit card payment is late? Well there are three main consequences that occur when you make a late credit card payment, and those are listed below.

You should do your best to avoid late payments. As you will see, the consequences for making a late payment can be quite devastating to your financial future. Always try other options first, before making a late payment. Being responsible with your credit cards is a key component to having an overall positive credit history.

#1 Late Credit Card Payments Result in Fees

When you pay your credit card late, you will be charged a late fee. This late fee is typically $35 or higher. It is added to your bill along with interest. Late fees typically compound the problem by making the minimum payment due increase. When you are already behind, this type just increases your balance.

When you know that you can’t make a payment on time, try calling the company before your due date. Most companies will waive the late fee at least one time, sometimes more. If you negotiate another date and allow them to set up an automatic withdraw for that date, you can avoid your late fee. Another solution is to change your due date. Some credit card companies allow you to do this one time. So use it wisely.

Another fee that may be a result of a late payment is an over the limit fee. If you are close to your limit when you make a late payment, the late payment fee could put you over your approved credit limit. Over the limit fees range from $15 to $35. This means that you could have an additional $70 added to your balance if you make a late payment. This becomes a cycle that is hard to break and hard to pay down.

#2 Late Credit Card Payments Change Interest Rates

If you are like most people, you did not read the pages of fine print that came with your credit card application. If you had, you recall that one late payment gives the credit card company the right to increase your interest rate without warning. Even if you have had a credit card for several years and never missed a payment, one late payment can increase your interest rate.

This amount of rate increase is not slight either. When you make a late payment, credit card companies will increase your rate greatly, sometimes to as much as 30%. If you have a special card with an introductory rate, this special rate will be lost and replaced with a much higher interest rate. As with a late fee, this new rate will increase your balance and the minimum payment due, putting more financial pressure on you.

Even scarier than this increase is the increase caused by a universal default clause. A universal default clause is a clause that is often found in the fine print of your credit card terms. This clause allows credit card companies to report to other companies your late payment. All of your credit card companies can then in turn increase your rate even if you haven’t been late with them.

#3 Late Credit Card Payments Might be Reported

You are not the only one who will know about your late credit card payment. Credit card companies report late payments to credit bureaus (usually only if the payment is 30 days late or more). About 35% of your credit score is made up of your payment history, so a late payment will adversely affect your credit score. However, not all late payments are treated equally. A payment that is 30-60 days late will not affect your long term credit, but a 90 day or more late payment will affect your long term history.

A low credit score affects just about every financial area of your life. Buying a house, a car, getting car insurance, opening a bank account, and even the deposit you are required to put down with your electric company is tied to your credit score. One late payment is not going to ruin your entire credit history, but if it happens often and you don’t rectify it right away, your credit score can be damaged.

If you are considering getting a credit card and you want to compare the terms and conditions of cards, you can use the free credit card “Chaser”. This will allow you to compare different cards, their interest rates, and the consequences for late payments in order to find the right card for you. Get started comparing the best credit cards right now!

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