Credit Card Payment
We hear numerous warnings about missing monthly dues.
At the onset of having our own credit cards, we already see the consequences of making late credit card
payment. Bank and other card issuers explicitly state increased interest rates and penalty fees that can
be incurred when we miss our monthly due dates. First, a default APR can be imposed. This is actually the highest
APR that a credit card company can assign so disregarding this is out of the question. Second, late credit card
payment fees between $20 and $40 will be charged. Third, we miss opportunities of an interest-free cycle since we
can’t avail the grace period offered to punctual payers. All these effects are just the tip of the iceberg.
The real long-term effect of late credit card payment can be seen on our credit report that is given by the three
major credit bureaus. Most credit card companies immediately notify credit bureaus when a late credit card payment
is more than 30 days late. This will automatically add an entry to our credit report that will stay there for seven
years. Also, since payment history is tantamount to 35% of our credit score, issuing late credit card payment will
have a significant effect on it. This will not only affect our credit card application opportunities in the future
but also decrease our chances of borrowing from banks for other investments such as houses and cars.
One late credit card payment can also be a chain reaction of increased interest rates and lower credit limits on
all our cards. Since our credit report is accessible to all creditors, a mark on it will present us as a greater
risk to all of them. This can trigger cautionary measures such as lower credit limits. Moreover, most auto
insurance companies use credit reports as basis for new businesses. Consumers who have bad records on their credit
score are more likely to pay 20% or 50% more in premiums than those with good credit. Our credit report is an open
book to credit card companies and the reviews that they do are more frequent than we think. Hence, we should avoid
even one small mark on it.
In spite of all that, there is still a silver lining we can count on. Thanks to the Credit CARD Act of 2009, credit
card companies are now banned from increasing rates on existing balances except for borrowers who are 60 days
behind. Companies are also required to return credit card holders to their original interest rates if and when they
makes on time payments for the next six months following the increase. This will definitely keep borrowers from
racking expensive rate increases every time they make a late credit card payment.
Source: Credit Cards For People With Bad Credit Rating
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