Why Missing Credit Card Payments is Never a Good Move
While making late card credit payment may not be a major concern for some cardholders, card companies will not hesitate to charge you with various fees for missing your credit card payments. What can possibly happen once you skip your payments?
One: The most obvious consequences are you will be required to pay a late fee. You can expect to pay $15 to $35 for making late card credit payment and will continue to pay these amount each month that your payment is late.
Two: Aside from the added fees, your interest rates are likely to skyrocket. These rates will normally increase to default rate, which is the highest possible fee that any card companies can charge legally. The higher the interest rates, the higher the fiancé charges. This will not only make it more expensive for you to carry a balance, it could also contribute to greater credit debt.
Three: If your card company applies universal default clause in the card agreement, you can expect other credit interest rates to increase as well.
Four: If you think missing credit card payments will not tarnish your credit history for a long time you are mistaken. In fact, once you are more than 30 days behind on your payments, your credit bureau will be notified. Your inaction will be recorded on your credit report and will stay there for seven years!
Five: Know that any late card credit payments can have grave effects on your credit score. Your score will plummet because the payment history makes up about 35% of your credit score. In turn, this will affect you once you try to obtain new cards in the future.
High interest rates and late fees are only two of the consequences that cardholders will face once they miss out on credit card payments. However, the effect that you want to avoid at all cost is hurting your credit score. Know that the calculations for credit score do not treat late payments the same way all the time.
Although 30 or 60 days late payments can have detrimental effects on your score more in the months that they occurred, they are likely to affect your score as time goes by. On the other hand, if you are behind payments for 90 days, your credit score will dip, particularly if this occurred within the past 24 months.