Consequences of Late Credit Cards Payments-2

Secondly, making late payments will make you see your interest rate raised to the creditor’s default rate, which can be sky high. In addition penalizing you with a fee, creditors will often increase your interest rate. Default rate can rise as high as 35%. High rate of interest increases your finance charges making it more expensive to carry a balance. If you make on-time payments for six months, your card issue is required to give back your pre-penalty rate.

Thirdly, when your payment is more than 30 days late, your delinquency will be reported by your creditor to the credit bureaus. This will also lower your credit score. Once a late payment is reported or entered to your credit report the payment will stay for seven years.

Fourthly, late payments will directly affect and lower your credit score. Credit history makes up 35% of your credit score. Missing payments can have a significant effect on your score affecting your ability to get new credit in the future. Being less than 30 days late doesn’t lower your score, as opposed to the late fees and interest rate hikes where even one day delay creates serious problems. But this must be avoided as the longer your account remains delinquent and the further behind you fall, the heavier the damage to your credit score.

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