Although no one enjoys being late to make payments on bills, it always happens and for credit card holders, it is not something you will need to encounter. Some people are late for payment because they forget and others do not have the money with them in their cards to make the payment in time. However, the bottom line is that you will suffer when you do not make payments as desired and the question is; to what extend will you suffer?
When you miss a payment, the best thing you need to do is to get prepared to deal with the consequences, some of which may potentially be costly to bear. There are mainly three consequences you may suffer after missing a credit card payment. You may be subjected to a late fee, higher interest rate and a negative mark against your credit score.
All these are potentially harmful to your finances and creditworthiness. Although one late payment may not affect your credit score, it leaves a scar on your credit card issuer relationship. The moment you begin being late on payment, your card issuer will report that to the credit reporting agencies. In most cases, you first late payment will attract a fee which ranges from somewhere between $15 to $35 depending on your history and relationship with the company.
You need to contact your card issuer but remember to avoid making wary statements as this could lower your credit limit. It is very important to make the late payment as soon as possible because although most companies will not report a late payment to the credit reporting agencies immediately, if you continue delaying the payment, it is most likely that they will eventually report the case. This is when your late payment will affect your score something, which you need to avoid at all costs.
Some credit card companies will increase your interest rates to a tune of 15% after just encountering one late payment. However, there is some protection on the consumer since the CARD Act was enacted. The CARD Act of 2009 stipulates that your credit card company cannot raise your interest rate on the prevailing balance or the debt you have on your card before you clock at least 60 days late payment limit.
The companies are allowed to raise your interest rates on any new purchases after one late payment but not on the existing debt. An increase in interest rates due to delinquent credit card has far much implications than the fee. With numerous late payments, it may cost you a penny. However, there are ways you can opt to minimize such suffering. If you have a balance transfer card with a zero or low introductory interest rate, things can turn haywire when you miss your first payment.
Although a balance transfer card tempts you with 0 percent interest for the first few months for the original balance, when you miss the payment, it can sky rocket from zero to levels of up to 20 percent. For example, if you have a debt of $3000, which is on a 0% balance transfer card, it means that you need to pay $250 a month so that you clear the debt in one year. However, if you miss a payment and the card reverts to a standard rate of about $17.29 percent, it means that you will have to pay about $275 every month so that you clear off the balance in the same period. This can cost you dearly because of that simple mistake of making one late payment.