There are a lot of reasons why people make late payments on their credit card bill. Some people don’t have reminders set up and so they forget. Other times, people are late because they can’t afford to pay it on time. Or maybe there was a hold up on your bank’s end and your payment took longer than normal to process and because of that it was late. Regardless of the reason, being late on your credit card is not a good thing and you should be aware of the consequences of a late payment.
If you are late on your credit card you need to be concerned about three things:
- What it means for you immediately. What kind of late fees does your credit card company charge?
- What does it impact you in the near future? Is missing a payment going to have a negative effect on your interest rate?
- What are the long-term consequences? How will missing a payment impact your credit rating?
Potential Late Fees
The first thing you need to consider is that a late payment means a late fee. This can be anywhere from $15 to $35, depending on your credit provider. If you know that you are going to be late with your payment, you should contact your lender. If this is the first time you will be late, you can probably come to an arrangement with them where they will move your date back and won’t charge you the late fee.
In this situation, it is best to have an exact date in mind when you will be able to make the payment. For example, instead of saying “I can pay sometime next week” you want to be able to say “I’ll pay next Friday”, this will make the credit card company more willing to work with you. They will also likely be more flexible if this is your first missed payment than they will be if you make a habit of late or missed payments or if you’ve made an arrangement to pay in the past and haven’t honored it.
Your Interest Rate Could Rise
The next thing you want to consider is the short term and what it means in regards to your interest rate. Some cards have it built into their policy that if you are late a certain amount times, your interest rate will spike. Depending on your card, you might only have to be late one time for this to happen. That’s why it is really important to know the exact terms of your credit card agreement and any potential consequences.
One of the things that it is important to be informed about is that your credit card company can only raise your interest rate when it comes to future payments and not your existing balance. The exception to this rule is if you are more than 60 days late with your payment. However, it only takes late payment, and it doesn’t matter how late it is, for them to be able to raise your interest rate for all your future purchases. This means that one mistake can be very expensive.
If this is another reason why it is important to call your credit card company before you are late and try to make an arrangement. If this is the first time you are in a position to miss a payment and you call in ahead of time, you may find that your credit card company is willing to work with you and that they will agree not to raise your interest at this time.
In addition to the short-term, you also have to worry about the long-term consequences and whether being late with a payment will negatively impact your credit score. If this the first time you are late, then it should have no impact on your credit card. The only exception to that is if you let it go more than 60 days, in which case, your credit card company may report it to the credit burrow and it would be considered a strike against you. That’s why it is important to never go that long without making a payment, because the later you are with your payment, the more impact it can have.
If you are repeatedly late with your credit card payments, then they may also report you. Though, again, the timing of the payment will also have an impact here. If you are a day or even a week late with your payment, they may go easy on you. However, if you are consistently a month late every time, they will probably report you and it will go on your credit score.
This is another reason why it is important to communicate with your credit card company. If you are proactive and make arrangements ahead of time or even if you are honest about your situation and forthright, they are more likely to be flexible. If you call your credit card company and arrange a set date to make your payment, it is less likely that they will report you. So it really is in your best interests to contact your lender and explain your situation, as it can benefit you in both the short and long term.