The Consequences of Making Late Credit Card Payments

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In the past several years credit card companies have become very ruthless with the terms they have set for their customers. It is very important that you read your card member agreement so that you are aware of what you are getting into and so that you know the consequences of you actions, such as; making late payments.

Making a late payment can actually cause several things to happen. First of all, you have no grace period. If the credit card company does not receive your payment on the day it is due, it will be considered late. At that point, you will be charged a late fee. How much that fee is depends on your terms. The standard fee is $35. Some companies may charge you more or less depending on your balance. I have seen them as low as $15 and as high as $50.

If you have not had a late fee in 12 months, you can probably get the credit card company to refund the late fee if you call them and ask them to credit the fee. Most companies will do this as an annual courtesy. They will not normally report you to the credit bureau until you have gone 30 days delinquent.

However, the late fee is not what I consider the greatest consequence of paying your credit card bill late. If you make a late payment, your credit card company my raise your interest rate. Some companies will not raise you rate until you have been late twice in 12 months. At the time, you will be affected by something called Universal Default and your interest rate will likely increase to 29.99%. Much as we all hate to read that small print, this is all stated in your card member agreement, making the whole thing nice and legal.

If you have an introductory rate or a balance transfer rate, you will lose that after one late payment. Your chances of getting your credit card company to reduce your interest rate, because you made a mistake are very slim. They may reinstate your original interest rate after 6 months of on time payments, but that also depends on your credit issuer’s policy.

The best thing you can do to avoid being caught in this situation is not to carry a balance. The consequences of a late payment are not very great if you pay your balance in full monthly.

However, that is not an option for everyone. If you carry a balance, you should set up a recurring automatic debit through your bank or the credit card company. Make sure it is setup to pay 3-5 days before your due date, that way if your due date fluctuates (some do), you will not be late.Credit cards can be a big convenience, but they are also a big responsibility. Knowing what your credit card company expects and what they can and cannot do is half the battle.