Credit cards require you to make a minimum payment on your balance at the end of your billing cycle each month. It is recommended that you make these payments in a timely manner, and if at all possible to pay off the entirety of your balance each month to avoid paying interest. Here are four consequences of a late credit card payment.
Your creditor will charge a late fee. Your next billing statement will include a fee for the late payments. Late fee amounts depend on your credit card’s late fee policy and whether it is your first time being late. You will be charged a late fee each month your payment is late.
Your interest rate will increase if your payment becomes sixty days past due. Creditors will often increase your interest rate to the highest interest rate on your credit card, known as the penalty rate. If you make six months of on-time payments, your card issuer is required to give back your pre-penalty rate. Nevertheless, purchases made after the penalty rate became effective may still receive the higher rate.
Once your payment is 30 days late, it will show up as a late payment on your credit report. Late payments on your credit report are visible to creditors who pull your credit, and they also drag down your credit score. Additionally, the longer you wait, the greater the damage to your credit score.
A single late payment can cause your credit score to plummet, especially if you had strong credit beforehand. But if you act quickly and pay now, you may be able to prevent serious damage. The later your payment is, the worse it gets. Now you know four consequences of a late credit card payment.
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