We live in busy and hectic world with many of us faced with due dates, deadlines, and schedules. It’s understandable that we can forget about our credit card payments, but there can be some very serious consequences, if it happens very often. By the time you realize it may be too late to fix the problem.
So, what happen if you miss your credit card payments for too many times? Here are three outcomes that you can expect after repeatedly missing credit card payments:
1. Additional Fees
If you miss just one payment on your credit card, you will be imposed a small fee. As per CARD Act of 2009, the highest amount of fee a credit card company can impose on a customer for late payment is $25. But this will go up, if you continue to miss payments.
According to the provisions of the CARD Act, if a credit card payment exceeds 30 days, or if a credit card holder has made more than one late payment in the last 6 months, then a higher fine of $35 be charged.
However, this isn’t actually a one-time fee, if you keep on missing your credit card payments, then you’ll be charged a higher fee for every 30 days. After many months of not paying bills on time, this could rack up to hundreds of dollars in fees, which means you throwing money down on the drain. So, it’s for your best that you never miss a credit card payment.
2. Much Higher Interest Rates
Failing to pay you credit card dues on time will certainly cost you additional fees, but that’s not the end of it. You’ll also be slapped with a higher interest rate. The same theory applies here too. The interest rate increases you’ll be charged for missing one payment is lower that if you miss several payments. So, it’s necessary that you keep in mind the consequences.
According to the CARD Act, your credit card issuer may raise your interest rate on your future charges for a missed credit card payment, and the company should give a prior notice of 45 days, before these increased charges are imposed. This gives you enough time to improve your habits so that you don’t have to face these higher interest charges in the future.
However, if you have more than one late payment within 6 months, credit card issuers are allowed to charge a penalty interest rate to your existing balance. The penalty interest rates are typically very high, closing around to 30%. This can increase your minimum monthly payments considerably after two missed credit card payments. As we said earlier, this is just money wasted, so develop a habit of paying off your credit card balances on time.
3. Your Credit Score Is Damaged
In addition of painful additional fees and higher interest rates, one of the biggest consequences of missing credit card payments is the damage of your credit score. Even just missing one credit card payment will result in a 5 point reduction of your credit score.
In case you didn’t know, 35% of your credit score is calculated by your credit history of paying your credit accounts and other dues on time. Your credit score will be seriously damaged if you just keep on missing payments.
And you probably know the consequences of a low credit score are. Banks and credit card issuers won’t give you loan, or a credit card without high interest rates, and in some case they won’t give you anything at all. So, make a priority of making timely payments.
The bottom line, missing credit card payments can affect your finances in more than one way, so make a goal of paying your bills on time. Otherwise, you’ll face some very serious big expenses, now and in the future.